The Relationship between Delegation and Incentives Across Occupations: Evidence and Theory

Jed De Varo and Suraj Prasad

Journal of Industrial Economics, 2015, vol. 63, issue 2, 279-312

Abstract: type="main">

A large literature suggests that incentive pay and delegation of worker authority are positively related. Using data from a large cross section of British establishments, we show that the positive relationship found in the empirical literature masks a stark difference across jobs. Classifying jobs into two categories (complex jobs, including professional, technical and scientific occupations, and simple jobs, consisting of all other non-managerial occupations) we find a positive relationship for simple jobs and a negative relationship for complex jobs. To explain this negative relationship, we develop a model where stronger incentives distort a worker's decisions towards low risk-return tasks.

Date: 2015
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Working Paper: The Relationship Between Delegation and Incentives Across Occupations: Evidence and Theory (2013)
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