The research is mostly about overpaying, not high but equal pay for everyone doing the same job. It happens when people compare their effort to others’ and if they feel over-rewarded it can actually lead to two outcomes:
Increasing effort to justify it, or
reducing effort
And the evidence is actually mixed between the two outcomes, because different people respond differently to different incentives, like flexibility, holidays, etc.
Equity theory mostly applies only when the work is measurable and the teams/individuals compare themselves constantly.
IMO this can be solved by better management and equal pay for equal work/skillset.
There are also other incentives that can crowd out internal motivation, such as surveillance, pressure, inequality. But obviously management doesn’t want to talk about those, much more profitable to reduce the pay.
High pay alone doesn’t really trigger crowding out.
I still maintain my position that this is largely a management and greed issue. And high and equal pay alone doesn’t create a lazy, zombie workforce.
Here’s some studies and theories arguing the opposite:
It is actually very well established:
https://link.springer.com/article/10.1007/s11211-008-0063-2
https://www.sciencedirect.com/science/article/abs/pii/0030507368900093
https://en.wikipedia.org/wiki/Equity_theory
https://en.wikipedia.org/wiki/Motivation_crowding_theory
https://pmc.ncbi.nlm.nih.gov/articles/PMC3906839/
https://www.sciencedirect.com/science/article/abs/pii/S2214804322001422
https://www.bsfrey.ch/wp-content/uploads/2021/08/crowding-effects-on-intrinsic-motivation.pdf
The research is mostly about overpaying, not high but equal pay for everyone doing the same job. It happens when people compare their effort to others’ and if they feel over-rewarded it can actually lead to two outcomes:
And the evidence is actually mixed between the two outcomes, because different people respond differently to different incentives, like flexibility, holidays, etc.
Equity theory mostly applies only when the work is measurable and the teams/individuals compare themselves constantly.
IMO this can be solved by better management and equal pay for equal work/skillset.
There are also other incentives that can crowd out internal motivation, such as surveillance, pressure, inequality. But obviously management doesn’t want to talk about those, much more profitable to reduce the pay.
High pay alone doesn’t really trigger crowding out.
I still maintain my position that this is largely a management and greed issue. And high and equal pay alone doesn’t create a lazy, zombie workforce.
Here’s some studies and theories arguing the opposite:
https://pubmed.ncbi.nlm.nih.gov/33705159/
https://en.wikipedia.org/wiki/Efficiency_wage
https://wol.iza.org/uploads/articles/275/pdfs/efficiency-wages-variants-and-implications.pdf