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

TY - UNPB

T1 - What’s in it for the firms?

T2 - Living Wage adoption as signal of ethical practice

AU - Schweinzer, Paul

AU - Swaffield, Jo

PY - 2014/10

Y1 - 2014/10

N2 - 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.

AB - 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.

KW - Living wage, Signalling, Reputation

M3 - Discussion paper

VL - 14/21

BT - What’s in it for the firms?

PB - RePEc ; DERS Discussion Papers (University of York)

CY - York

ER -