We study worker and firm behavior in an environment where worker effort could depend on co-workers' wages. Theoretically, we show that an increase in workers' 'concerns' with coworkers' wages should lead profit-maximizing firms to compress wages under quite general conditions. However, firms...

We study worker and firm behavior in an efficiency-wage environment where co-workers' wages may potentially influence a worker's effort. Theoretically, we show that an increase in workers' responsiveness to co-workers' wages should lead profit-maximizing firms to compress wages under quite...

Once educational attainment and other observable characteristics have been controlled for, studies show that the gender wage gap among adult full-time workers is about half the size it was in 1980. Using U.S. Census and Current Population Survey (CPS) data from 1959 through 1999, the authors...