THE ROLE OF FAIRNESS IN WAGE DETERMINATION

Neoclassical wage theory is based on the premise that a worker's utili ty is based on his own wage and his own hours of work, without referen ce to the wages and hours of others. This article reviews anecdotal ev idence that the wages of others are a powerful force in determining wo rker satisfaction, such that utility goes down when the wages of other s go up. The resulting comparisons are a powerful force in determining wage structure, but do not exclude ultimate effect of neoclassical wa ge determinants.