As reported by the Wall Street Journal, economists at Columbia University and the University of California, Berkeley, have shown that workers seem to be highly averse to pay inequality. The new study reveals sharp declines in output, attendance and social cohesion among groups of workers who are paid differently compared with groups in which everyone is paid the same.
The authors content that their study represents the largest such experiment ever conducted, one involving nearly four hundred Indian workers. These workers were organized into teams of three workers. All were paid either two hundred and forty rupees per day to show up for work, or five percent above or below that amount.
The output of workers who were paid less fell twenty two percent compared with colleagues belonging to teams in which everyone was paid the same. Here’s the most amazing thing – colleagues that were paid more than the two hundred and forty rupee baseline were no more productive.
Even he highest paid workers were associated with substantially lower attendance. In one exercise, researchers asked one hundred and twenty six teams of three to build towers of raw materials. Unequally paid teams built seventeen percent shorter towers on average.