Econ PhD @Harvard, @InequalityHKS scholar, former @KennedyScholars || Tweets about macro, labo(u)r, inequality || 
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When asked why cutting wages might lower workers' effort, it seems mostly about "gratitude and loyalty" - or what we might think of as reciprocity, fairness or "low morale" (dovetailing nicely with Bewley's interviews, which suggested morale was the key). (3/6)pic.twitter.com/Imf5dzOXTS
When asked what factors keep workers from 'slacking off on the job', by far the most important was worker-management relations - and *not*, as many economic theories would have us believe, monitoring by supervisors, or incentives created by higher pay or fear of job loss (4/6)pic.twitter.com/HAbmFvBp0J
Managers were pretty evenly split when asked whether workers would prefer a certain pay cut or an uncertain probability of job loss. This is interesting given that (1) demand shocks are mostly absorbed in job losses not pay cuts, and (2) people are usually risk averse (5/6)pic.twitter.com/embLFTnkEk
They conclude that " The most important results of this study are the strong support found for two explanations of wage rigidity: adverse selection as it applies to quits and the dependence of effort on wages" (6/6)
Notes: the survey was of 184 firms, including 111 large firms (from Business Week 1000). "BW" and "NBW" in the results stand for Business Week and Non-Business Week respectively. Importance scores are a score from 1 to 4, with 1 as "not important" and 4 as "very important".
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