Document Type
Journal article
Source Publication
Journal of Economic Behavior & Organization
Publication Date
2-1-2015
Volume
110
First Page
59
Last Page
77
Publisher
Elsevier BV
Keywords
Productivity; Top management pay; Relative pay; Transitional economy
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.
DOI
10.1016/j.jebo.2014.12.001
Print ISSN
01672681
Funding Information
Michael Firth acknowledges financial support from the Government of the HKSAR (LU 390113). Oliver Rui acknowledges financial support of a CEIBS research grant and a National Science Fund Committee of China (No. 71372203).
Publisher Statement
Copyright © 2014 Elsevier B.V. All rights reserved.
Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Language
English
Recommended Citation
Firth, M., Leung, T. Y., Rui, O. M., & Na, C. (2015). Relative pay and its effects on firm efficiency in a transitional economy. Journal of Economic Behavior & Organization, 110, 59-77. doi: 10.1016/j.jebo.2014.12.001