March 14 2011
Preeminent economist presents study on employee reactions to relative pay
Through a “natural experiment” created by public reporting of faculty salaries in the University of California system, Professor David Card (UC-Berkeley Class of 1950 Professor of Economics) measured how co-workers at different pay levels react when they learn about their relative salaries.
In the NBER working paper “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction,” Professor Card and his co-authors reveal that those who discovered they were being paid below average became dissatisfied with their jobs, while those learning they were paid above average exhibited no “offsetting” increase in job satisfaction.
Professor Card shared these findings recently in a lecture at Cornell University’s ILR School (View video – 90 minutes). Card’s lecture was sponsored by Cornell's Institute for the Advancement of Economics and hosted by ILR's Department of Labor Economics.
In addition to his named professorship, Card has received the coveted John Bates Clark Prize from the American Economic Association for the economist under 40 whose work is judged to have made the most significant contribution to the field, the IZA Prize in Labor Economics and the Frisch Medal by the Econometric Society. Professor Card is also director of the Labor Studies Program of the National Bureau of Economic Research.
View full lecture on “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction.” (90 mins)