Experimental Design Details
In study 1, we exploit a work scenario that gives us the opportunity to inspect individual behavior of workers after manipulating information about why they get more pay, suggesting different intentions of the employer (i.e. a lack of voluntariness in the employer’s pay decision vs. a voluntary decision). Due to a series of coincidental events, this real world case allows us to credibly vary information about an employer’s decision-making without deceiving people. The concrete background is a large-scale research project at a research institute connected to a German university where casual workers conducted telephone interviews for a representative nation-wide survey. Due to the implementation of a new minimum wage in Germany in January 2015, a lack of clarity about the legal background of the project occurred. The project leadership was requested by the university to solve a possible conflict between the level of pay and the new minimum wage law, in consequence of which the project leadership increased compensation for the interviewers by paying an extra amount of money for participation in a follow-up online survey. To use this situation for an investigation into the behavioral effects of minimum wages, we varied the level of information on why the project leadership was willing to pay an extra amount of money. During the online survey, a randomly selected group of interviewers could read on their screens that the payment decision was because the employer was requested to do so by others with an explicit reference to the new minimum wage law in Germany (minimum wage treatment). Crucially, this information was not given to individuals in the control group (fair wage treatment). Thereby, we test whether lacking voluntariness underlying the wage hike, in the context of a minimum wage, impairs the reciprocal behavior of workers in comparison to a pure gift-exchange scenario. Meanwhile, a third group of randomly selected interviewers could read a slightly different information treatment that mentioned the lack of voluntariness in the employer’s pay decision but included no reference to the minimum wage (exogenous generosity treatment). The idea of this treatment is to explain why exogenous interventions into wage policies might be able to impair reciprocal behavior by focusing on the lack of intent behind the pay increase. By using data from the online survey itself, we inspect the economic outcomes as well as potential transmission channels of our manipulation. First and foremost, we examine individual effort in a task, as participants were asked to do a vignettes questionnaire on hypothetical choices at work. Each interviewer was asked to do a certain number of vignettes, but generally could make a completely voluntary decision on the level of effort. In such a gift-exchange setting, which emerges from the presence of a monetary gift while effort cannot be enforced, we expect a strong role of fairness perceptions. To investigate the role of perceptions as the potential transmission channel of reciprocal behavior, we analyze responses to subjective questions on how workers assess their employer, and we complement our analysis by using data on reservation wages from the survey.
In study 2, we implement various hypothetical work scenarios as part of a controlled survey experiment. Survey participants assess the probability of a positive reciprocal behavior by answering a question on the expected effort of a hypothetical worker. This allows us to test whether pay increases due to minimum-wage policies can be considered as a positive factor in effort levels, compared to a baseline with a stable wage level. Furthermore, we can compare the potential behavioral implications of a pay increase due to minimum-wage legislation to a pure gift-exchange scenario of a pay increase voluntarily induced by the employer. By inspecting varying work scenarios, reflecting real-world contexts, we can learn more about the external validity of our findings on minimum wages and gift-exchange. Specifically, we are interested in comparing work scenarios with i) more or less personal relationships due to varying workforce sizes and ii) virtual vs. non-virtual work contexts. We make use of a coordination game to create incentives for survey participants to provide valid responses. Adding to our main question on effort levels of a hypothetical worker, we also ask respondents about fairness perceptions, as the potential mechanism behind effort responses, and about their own behavior (non-incentivized). Finally, we gather additional survey data that for instance allow distinguishing between individuals with regard to their attitudes towards minimum wages. This could play a role for responses regarding self-reported individual effort levels. Another issue could be the employment status of the survey participants, since, for example, self-employed individuals may have particularly negative views on minimum-wage policies.