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Ownership, Agency and Wages: An Examination in the Fast Food Industry

Alan Krueger

No 3334, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates the difference in compensation between company-owned and franchisee-owned fast food restaurants. The contrast is of interest because contractual arrangements give managers of company-owned outlets less of an incentive to monitor and supervise employees. Estimates based on two data sets suggest that employee compensation is slightly greater at company-owned outlets than franchisee-owned outlets. The earnings gap is 9 percent for assistant and shift managers and 2 percent for full-time crew workers. Furthermore. the tenure-earnings profile is steeper at company-owned restaurants. These findings suggest that monitoring difficulties influence the timing and generosity of compensation.

Date: 1990-04
Note: LS
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Published as The Quarterly Journal of Economics, 106, February 1991, pp. 75-102

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Working Paper: Ownership, Agency and Wages: An Examination of the Fast Food Industry (1987) Downloads
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