This paper develops a theoretical framework to think about employees' effort choices, and applies this framework to assess the ability of existing experimental designs to identify the effect of pay inequality on worker effort. The analysis shows that failure to control for a number of confounds—such as reciprocity towards the employer in multi-lateral gift-exchange games (vertical fairness), or the incentive to increase effort when feeling underpaid under piece rates (income targeting)—may lead to inaccurate interpretation of evidence of treatment effects. In light of these findings, the paper provides a set of recommendations on how to improve identification in the design of controlled experiments in the future. •We develop a model to study employees' effort choices in experiments.•We formally assess the design of experiments on the effect of pay inequality on effort.•We find a number of confounds that may impair identification of treatment effects.•Confounds include vertical fairness, income targeting, repeated interactions, procedural fairness.•A set of recommendations to improve identification in experiments is provided.