Why People Think That Higher‐Paid Workers Make Higher‐Quality Products

ABSTRACT Information about workers' wages is publicly available from various sources (e.g., Glassdoor, SEC filings) and publicized by companies across sectors worldwide. How does this wage information affect the perceived quality of the products made by these workers? Across 10 experiments with adult participants from the U.S. and France, we find that people expect and perceive products to be of higher quality when made by well‐paid workers—both in comparison to products made by lower‐paid workers and to those from companies where wage information is unknown. This effect is curvilinear, as it tends to flatten above high salary thresholds. These perceptions, in turn, increase consumers' likelihood of choosing these products and their willingness to pay a premium. This effect is driven by the belief that well‐paid workers are more satisfied, which leads to higher‐perceived quality output, and by the inference of higher levels of firm investments, and seems to be stronger if production workers' pay is involved. Our findings contribute to research on the determinants of value and quality expectations, as well as lay theories of product quality. They also offer practical implications for the communication, use, and regulation of worker pay information.