Will a Future Wage Increase Help Workers Now?
Will a Future Wage Increase Help Workers Now? is a final group project I completed for an Experimental Economics course. When tasked with designing an experiment to answer any question, my partner and I were curious to examine the psychological effects of wage changes. While plenty of research has been done on the effects of minimum wage and how an increase in money can lead to more security and better mental health for workers, very little research has been done into the effects of the wage announcement itself. Our experiment was designed to determine a worker's cognition and willingness to work and isolate how these may change based on the announcement of an increase in wages.
Our experiment requires subjects to partake in a monotonous task which resembled work for a series of rounds. Our treatment group would then be informed their reward would increase in future rounds, while the control group would not be informed of any reward increases. By telling this information only to the treatment group while still not raising the reward, we hoped to isolate the effects of the announcement itself and not the money associated with it. Though we were not required to implement this experiment within the scope of the class, we do believe there could be fascinating answers to our research question. While money is obviously the concrete reward of a job that can directly change one's living situation, the psychological benefits of expecting more money could be incredibly strong, leading to a higher standard of worker well-being and a more stable labor market.