Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment

Bruce Shearer

Cahiers de recherche from Université Laval - Département d'économique

Abstract:

Data from a field experiment, conducted within a tree-planting firm, are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages. The experiment provides daily observations on individual worker productivity under both piece rates and fixed wages. ANOVA methods are used to estimate the incentive effect to be 20%. Since planting conditions potentially affect the incentive effect, structural econometric methods are used to generalize the experimental results to out-of-sample conditions. The structural model identifies a lower bound on the incentive effect that is estimated to be 18.5%.

Keywords: Compensation Systems; Incentives; Experimental Economics; Structural Econometrics (search for similar items in EconPapers)
JEL-codes: C9 D2 J3 L2 (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:lvl:laeccr:0101

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