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cc-by-nc-nd, (c) Barigozzi et al., 2017
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/118691

Envy in Mission-Oriented Organizations [WP]

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According to the labor donation theory, workers adhering to their firms'mission are willing to donate a portion of their paid labor. In this paper, we study how workers' fairness concerns limit the firm's ability to extract labor donation from its employees. We find that, in sectors where the firm's mission is important, optimal contracts are such that high-ability employees perceive their wage as less fair than low-ability employees and they must be rewarded with an "envy rent". The opposite is true in sectors where the firm's mission does not play a relevant role. We empirically test the predictions of the model using the German Socio-Economic Panel finding support for our theoretical results.

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BARIGOZZI, Francesca and MANNA, Ester. Envy in Mission-Oriented Organizations [WP]. UB Economics – Working Papers. 2017. Vol.  E17/366. ISSN 1136-8365. [consulted: 18 of October of 2026]. Available at: https://hdl.handle.net/2445/118691

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