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Methods of Pay and Earnings: A Longitudinal Analysis

Daniel Parent ()

CIRANO Working Papers from CIRANO

Abstract: In this paper, I investigate the relationship between methods of pay, including piece rates and bonuses, and the level and variance of wages using longitudinal data from the NLSY (1988-1990). Results using OLS and fixed-effects show that piece rate workers earn a premium compared to other workers while the positive effect of bonuses measured with OLS disappears when I use fixed-effects. Also, it is shown that the effect of piece rates is negatively related to the level of tenure, which suggests that rates may be cut as workers accumulate seniority. Finally, using minimum distance procedures to estimate a covariance model of wages, I am able to show that most of the variance for piece rate workers can be attributed to unobserved worker productivity, which is not the case for workers having pay for performance schemes. Cet article examine le lien entre les méthodes de rémunération, incluant les bonus et les métayages, et le niveau ainsi que la variance des revenus de travail. Les données utilisées proviennent du National Longitudinal Survey of Youth (1988-1990). Les résultats indiquent que les travailleurs payés à l'unité gagnent en moyenne davantage que les auters travailleurs, et ce résultat est robuste à l'estimation des premières différences. Par ailleurs, l'estimation d'un modèle simple représentant la structure de covariance des salaires montre que la majorité de la dispersion des salaires pour les travailleurs payés à l'unité est attribuable à la productivité non-observée de ces travailleurs.

Keywords: Methods of pay; wage level; wage dispersion; Méthodes de rémunération; niveau et dispersion des salaires (search for similar items in EconPapers)
JEL-codes: J33 (search for similar items in EconPapers)
Date: 1997-04-01
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Journal Article: Methods of Pay and Earnings: A Longitudinal Analysis (1999) Downloads
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