What’s in it for the firms?: Living Wage adoption as signal of ethical practice
What’s in it for the firms?: Living Wage adoption as signal of ethical practice
We analyse the effect of the voluntary adoption of a living wage on firms operating in product markets in which consumption behaviour is at least partly determined by reputational concerns for ethical firm behaviour. We show without recourse to morality or efficiency-wage theories that the adoption of a living wage policy may increase consumer welfare as well as producer surplus through the segmentation of a previously homogenous product market. In particular, we demonstrate that it may serve a firm’s profit maximisation interest to voluntarily adopt a living wage.
Living wage, Signalling, Reputation
Department of Economic and Related Studies, University of York
Schweinzer, Paul
70c02ced-730b-4cf0-862f-4e6ee114cff5
Swaffield, Jo
9e0d6fe1-3219-4d1c-8cff-52c7fac1568f
1 October 2014
Schweinzer, Paul
70c02ced-730b-4cf0-862f-4e6ee114cff5
Swaffield, Jo
9e0d6fe1-3219-4d1c-8cff-52c7fac1568f
Schweinzer, Paul and Swaffield, Jo
(2014)
What’s in it for the firms?: Living Wage adoption as signal of ethical practice
Department of Economic and Related Studies, University of York
Record type:
Monograph
(Discussion Paper)
Abstract
We analyse the effect of the voluntary adoption of a living wage on firms operating in product markets in which consumption behaviour is at least partly determined by reputational concerns for ethical firm behaviour. We show without recourse to morality or efficiency-wage theories that the adoption of a living wage policy may increase consumer welfare as well as producer surplus through the segmentation of a previously homogenous product market. In particular, we demonstrate that it may serve a firm’s profit maximisation interest to voluntarily adopt a living wage.
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Published date: 1 October 2014
Keywords:
Living wage, Signalling, Reputation
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Local EPrints ID: 453578
URI: http://eprints.soton.ac.uk/id/eprint/453578
PURE UUID: b5998c8e-9b33-4870-b690-af5ae89dcbf9
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Date deposited: 20 Jan 2022 17:31
Last modified: 17 Mar 2024 04:09
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Author:
Paul Schweinzer
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