The Impact of Negatively Reciprocal Inclinations on Worker Behavior: Evidence from a Retrenchment of Pension Rights

Abstract

We document that the strength of negatively reciprocal inclinations affects workers’ reaction to unfair treatment. We exploit unique matched survey and administrative data on male public sector employees in the Netherlands and compare the job motivation of employees born in 1950, who faced a substantial retrenchment of their pension rights resulting from a pension reform in 2006, to that of slightly older employees who remained entitled to more generous pension benefits. Job motivation is significantly lower among negatively reciprocal employees who were affected by the reform. The adverse effect on job motivation is stronger for negative reciprocal employees born very shortly after the cutoff date of January 1, 1950, as well as for those with many unaffected colleagues, who perceive the policy change as being more unfair. The treatment effect is stronger among workers who are more likely to hold their employer accountable for the drop in their pension rights.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2157 . This paper was accepted by Uri Gneezy, behavioral economics .