What’s in it for the firms? Living Wage adoption as signal of ethical practice

Research output: Working paperDiscussion paper

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Publication details

DatePublished - Oct 2014
PublisherRePEc ; DERS Discussion Papers (University of York)
Place of PublicationYork
Number of pages15
Volume14/21
Original languageEnglish

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.

    Research areas

  • Living wage, Signalling, Reputation

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