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Unequal Pay Breeds Productive Employees Study Finds

Update Date: Oct 02, 2012 11:53 AM EDT

The commonly shared opinion that a happy worker makes a productive worker may not actually be true.

In a study that has produced obvious results but involved oblivious subjects, Professor Eduardo Pérez Asenjo of Universidad Carlos III de Madrid's (UC3M) Economics Department shows that relative earnings affect our happiness and our job performance.

According to his study, if an individual's earnings are less than those of her/his peers, s/he will become despondent and work more hours.

The reason?

"The most likely explanation lies in social comparisons, although it could also be due to the idea that if those around me earn more than I do, it might indicate that if I work hard I will end up earning as much as they do," explains Professor Pérez Asenjo. "Therefore, the effect of others' earnings on my happiness is negative, because I compare myself to them and it makes me unhappy to earn less than them; so I work more hours so that I can earn the same as or more than them," he maintains.

"This confirms the hypothesis of what I perceived, but not the way I would like things to be," the author of the study comments. "I would find it healthier not to compare what we earn to what others earn and I think it would be 'better' if these things didn't affect our happiness," he continues.

In an article titled Greed and Debt: The True Story of Mitt Romney and Bain Capital in rolling stone magazine it was said that Mitt Romney paid his top employees bonuses and salary that differed in point percentages without just cause or warning.

The reason, the magazine claimed, was to ensure constant competition among his workers and his company always ran smoothly with employees vying always for more pay and recognition.  

Human resource management companies. "It might be a relevant criterion to keep in mind, when setting salaries, that an employee is concerned not only with what s/he earns, but also with what those around her/him earn," comments the researcher, whose perception is that a happy worker is much more productive than an unhappy one. 

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