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URL:
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https://ub-madoc.bib.uni-mannheim.de/30146
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URN:
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urn:nbn:de:bsz:180-madoc-301466
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Document Type:
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Working paper
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Year of publication:
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2012
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The title of a journal, publication series:
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Working Paper Series
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Volume:
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12-03
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Place of publication:
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Mannheim
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Publication language:
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English
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Institution:
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School of Law and Economics > VWL, Experimentelle Wirtschaftsforschung (Engelmann 2010-14)
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MADOC publication series:
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Department of Economics > Working Paper Series
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Subject:
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330 Economics
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Classification:
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JEL:
C91 , J88 , K31,
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Subject headings (SWD):
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Verbraucherverhalten , Moralisches Handeln , Mindestlohn , Experimentelle Spieltheorie
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Keywords (English):
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Fairness , crowding out , consumer behavior , minimum wage , experimental economics
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Abstract:
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To address the impact of regulation on ethical concerns of consumers, we study the example of minimum wages. In our experimental market, consumers have monopsony power, firms set prices and wages, and workers are passive recipients of a wage payment. We find that the consumers exhibit considerable fairness towards the workers by buying from the firm with the higher price and the higher wage. We also find that consumers have a tendency to split their demand equally between firms, which is a simple strategy to provide both workers with a minimal payoff. Introducing a minimum wage in a mature market raises average wages despite its significant crowding-out effects on consumers' fairness concerns. Abolishing a minimum wage crowds in consumers' fairness concerns, but crowding in is not sufficient to avoid overall negative effects on the workers' wages.
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Working Paper Series
Mannheim
12-03
[Working paper]
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