Abstract
Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity (in a context with no future employment opportunities). However, structuring a portion of the wage as a clear and unexpected gift – by offering a raise (with no additional conditions) after the employee has accepted the contract – does lead to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers.
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