Fairness in labor contracts leads to higher productivity and wages
The article explores how fairness between employers and employees can lead to gift exchange practices in the workplace, affecting wage differentials. By using a game theory model, the researchers found that when both parties value reciprocity, gift exchange can be successful. This can lead to increased productivity in firms through rent-sharing agreements. The study suggests that French employers and employees make decisions based on fairness concerns, supporting the idea that fair wages can motivate higher effort levels.