Document Type

Journal article

Source Publication

Journal of Economic Behavior & Organization

Publication Date

2-1-2015

Volume

110

First Page

59

Last Page

77

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

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

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