Wages, Promises and Effort in an Intercultural Labour Market: Experimental Evidence from Australia

In this article, we use economic experiments to explore the role of culture in labour market interactions between Australian employers and either Australian or Asian workers. We use two variants of the gift exchange game. In one, employers make binding, in the other non-binding, wage offers. Results show that attitudes and behaviour are similar across cultural groups, but intercultural interaction changes between the games. Non-binding wage offers are completely disregarded in final wage decisions by employers when made to Asians. However, Asians are rewarded more for additional effort.