Published in The Quarterly Journal of Economics, Volume 105, Issue 4, November 1, 1990, pages 1003-1015. Copyright © 1990 MIT Press. The definitive version is available at http://www.jstor.org/stable/2937882.
A small interview survey was undertaken to see how actual wage-setters would react to the central ideas of several economic theories of wage stickiness. Wage cuts were surprisingly prevalent in recent years, despite the booming economy. The strongest finding was that managers believe that perceptions of fairness play a major motivational role in labor markets and that a "fair" wage policy is a good deal more complicated than simply not cutting wages. We also found substantial evidence for money illusion and against the adverse-selection version of the efficiency wage model.