| Abstract |
How does growing pay transparency affect workers’ fairness perceptions and effort? In a field experiment with college students in China hired to do a three-hour data entry job, we informed randomly selected participants that there were others earning more for the same job (treatment condition), keeping the rest uninformed (control condition). Despite perceiving their pay as less fair, the treated participants increased their work effort as compared to those in the control condition. The treatment effects are not moderated by the participants’ fairness concerns. The reasons participants gave for pay differences, elicited after the experiment, are benign, “better workers” being most frequent. A representative survey of working population in China corroborates our experimental findings. |