Is it better to give employees gifts or cash?

What determines reciprocity in employment relations? We conducted a controlled field experiment and tested the extent to which cash and non-monetary gifts affect workers’ productivity. Our main finding is that the nature of the gift, not its monetary value, determines the prevalence of reciprocal reactions. A gift in-kind results in a significant and substantial increase in workers’ productivity. An equivalent cash gift, on the other hand, is largely ineffective or even though an additional experiment showed that workers would strongly favor the gift’s cash equivalent.

Source: “The Currency of Reciprocity – Gift-Exchange in the Workplace” from Institute for Empirical Research in Economics, University of Zurich, Working Paper Series, ISSN 1424-0459

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