Negative reciprocity and retrenched pension rights

Abstract

We document the importance of negatively reciprocal inclinations in labor relationships by showingthat a retrenchment of pension rights, which is perceived as unfair, causes a larger reduction injob motivation the stronger workers’ negatively reciprocal inclinations are. We exploit uniquematched survey and administrativedata on male employees in the public sector in the Netherlands and compare the job motivation ofemployees born in 1950, who faced a substantial retrenchment of their pension rights resultingfrom a pension reform in 2006, to that of slightly older employees who remain entitled to moregenerous pension benefits. Job motivation is significantly lower among negatively reciprocalemployees who were affected by the reform. The negative effect on job motivation is greater fornegative reciprocal employees born very shortly after the cut-off date of January 1, 1950, as wellas for those with many untreated colleagues, and who therefore arguably perceive the policy changeas being more unfair. We also find that the treatment effect is strongeramong workers who are more likely to hold their employer accountable for the drop in their pensionrights, that is, those who work for the national government.(This abstract was borrowed from another version of this item.)