– The paper aims to examine factors that influence individuals' preferences between wages indexed on job performance or efficiency over equity-based wages.
– Generalized linear latent and mixed models (GLLAMM) are estimated on the 2005 wave of the World Values Survey on employed individuals from 43 countries.
– Results suggest that employees' preference for efficiency-based wages increases with education and globalization, while it decreases with unemployment rates.
– Institutions and specifically public policies that promote education, and globalization, along with policies that reduce unemployment rates could be used to promote wage setting policies that reward performance or efficiency.
– The originality of the study lies in its use of both individual- and country-level data to estimate GLLAMM that take into account the multi-level nature of the dataset. This study can inform firms and policymakers on what measures to adopt to promote preferences for efficiency-based wages among individuals.
