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)

Research output: Contribution to journalJournal


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 languageEnglish
Pages (from-to)59-77
JournalJournal of Economic Behavior & Organization
Publication statusPublished - 2015

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  • Productivity
  • Relative pay
  • Top management pay
  • Transitional economy

Indexed by

  • ABDC-A*
  • Scopus
  • SSCI


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