Bonus compensation and productivity: evidence from Indian manufacturing plant-level data

Natalie Chun and Soohyung Lee

Journal of Productivity Analysis, 2015, vol. 43, issue 1, 47-58

Abstract: This paper examines whether bonus compensation for managers and workers matter for manufacturing plant productivity. We use a model based on a Cobb-Douglas production function where bonus incentives can increase worker effort and attract more skilled workers leading to increases in plant productivity. The effect of bonus compensation policies on productivity is estimated by using a representative sample of Indian manufacturing plants between 1999 and 2006. We find that conditional on a plant’s observable and unobservable characteristics, allocating a higher proportion of compensation to bonus pay for managers and workers has a significant positive effect on productivity. Copyright Springer Science+Business Media New York 2015

Keywords: India; Bonus compensation; Productivity; Manufacturing; O12; L60; M52 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11123-014-0421-z (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jproda:v:43:y:2015:i:1:p:47-58

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11123/PS2

DOI: 10.1007/s11123-014-0421-z

Access Statistics for this article

Journal of Productivity Analysis is currently edited by William Greene, Chris O'Donnell and Victor Podinovski

More articles in Journal of Productivity Analysis from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().