A new research paper, “Experimental evidence on the role of outside obligations in wage negotiations,” has been published in the prestigious Journal of Economic Behavior & Organization. Authored by Jennifer Pate of Loyola Marymount University, Laura Razzolini of the University of Alabama, and Shakun D. Mago of the University of Richmond Robbins School of Business, the paper delves into the impact of disclosing external obligations on wage bargaining dynamics. It also illustrates the academic impact of the Freedom Center’s (FC’s) Visiting Fellows Program.

Abstract: We examine how sharing information about outside obligations impacts wage negotiations. We consider an ‘employee’ with an outside obligation, whose performance determines the surplus and an ‘employer’ with the power-to-give, who determines the employee’s wage. We find that wage offers increase with obligation amounts when the level of obligation is known. However, the employer simply redistributes surplus from employees with no obligations to those with higher obligations. We find no evidence of gender bias in wage offers, similar to other ultimatum games. Our experiment provides a potential explanation for some of the gender wage gap and shows how seemingly equitable policies may perpetuate inequities among employees.

This is the first paper Pate and Razzolini have published with their affiliation as FC Visting Fellows. The program, created by Mary L. Rigdon, Freedom Center Director and Associate Professor of Political Economy and Moral Science, welcomes distinguished scholars for a short yet comprehensive stay of 1 to 6 weeks in an academic year. It provides Visiting Fellows maximum engagement with the University community, particularly graduate students and faculty. Fellows give talks and guest lectures in courses taught in Political Economy & Moral Science and Philosophy.

Jennifer and Laura took advantage of being Visiting Fellows to focus on their collaboration while in Tucson on the UArizona campus. Please read the following features to learn more about their experiences.