How workers respond to wage cuts. A randomized field experiment was carried out to determine how workers respond to wage cuts and the results published in Institute for the Study of Labor: Discussion Paper Series (Mar. 2011). A company formed teams of two employees for a temporary promotion campaign. Both team members had identical individual tasks (sell promotional cards for entrance to a nightclub) and were initially paid the same hourly wage.

After a short period of time on the job, teams were unknowingly randomly assigned to one of three treatments.

In the “unilateral wage cut” treatment, one worker’s pay was cut by 25%; in the “general wage cut” treatment, both workers’ pay was cut by 25%; and in the “baseline” treatment, neither worker received a pay cut. The variable of interest was the decrease in the number of promotional cards sold after implementation of the pay cuts. The researchers wanted to know if the average decrease in cards sold would differ depending on whether one or more of the workers received a pay cut.

a. Identify the type of experimental design used in the study.

b. Identify the dependent variable of interest.

c. What is the factor in this experiment? The factor levels?

d. Specify the null hypothesis of interest to the researchers.

e. The ANOVA F-test was carried out and resulted in a p-value less than .001. Interpret these results using a = .01.