Relative pay and its effects on firm efficiency in a transitional economy

Michael Arthur Firth; Oliver Meng Rui; Tak Yan Leung; Chaohong Na

doi:10.1016/j.jebo.2014.12.001

Relative pay and its effects on firm efficiency in a transitional economy

Michael Arthur Firth (First Author), Oliver Meng Rui (Participant Author), Tak Yan Leung (Participant Author), Chaohong Na (Participant Author)

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Abstract

In this study, we examine the impact of relative pay (manager pay divided by average worker pay) on a firm's productivity. Using data from a major transitional economy, China, we find that relative pay is negatively associated with high productivity. Our results provide support for the view that workers are alienated when their incomes are far lower than that of top management and this leads to lower productivity. This effect is most pronounced in labor intensive firms.

Original language	English
Pages (from-to)	59-77
Journal	Journal of Economic Behavior & Organization
Volume	110
DOIs	https://doi.org/10.1016/j.jebo.2014.12.001
Publication status	Published - 2015

Corresponding author email

mafirth@ln.edu.hk

Keywords

Productivity
Relative pay
Top management pay
Transitional economy

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abstract = "In this study, we examine the impact of relative pay (manager pay divided by average worker pay) on a firm's productivity. Using data from a major transitional economy, China, we find that relative pay is negatively associated with high productivity. Our results provide support for the view that workers are alienated when their incomes are far lower than that of top management and this leads to lower productivity. This effect is most pronounced in labor intensive firms.",

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Relative pay and its effects on firm efficiency in a transitional economy

Abstract

Corresponding author email

Keywords

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