Perceptions of Equity and the Distribution of Income

This article develops a model in which quit rates, and thus the income distribution, depend on employee perceptions of the accuracy of employer assessments of individual productivity because these latter assessments affect wages. When employees believe that these assessments are accurate, income ine...

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Bibliographic Details
Published in:Journal of labor economics 2002-04, Vol.20 (2), p.249-288
Main Author: Rotemberg, Julio J.
Format: Article
Language:English
Subjects:
Accuracy
Comparative studies
Correlation analysis
Economic models
Economic theory
Economics
Educational attainment
Employee compensation
Employees
Employers
Employment
Equity
High income
Income distribution
Income inequality
Industrial relations
Labor economics
Labor market
Labour economics
Low income
Manycountries
Perception
Perceptions
Productivity
Tenure
Wages
Wages & salaries
Workers
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Summary:This article develops a model in which quit rates, and thus the income distribution, depend on employee perceptions of the accuracy of employer assessments of individual productivity because these latter assessments affect wages. When employees believe that these assessments are accurate, income inequality tends to be high. The model can account for the negative correlation across some countries of inequality and the extent to which inequality is deemed to be excessive. It also fits the contrast in U.S. and French experiences concerning the tenure of highly educated workers with high wages relative to the tenure of lower‐paid workers.
ISSN:0734-306X
1537-5307
DOI:10.1086/338218