The role of education of entrepreneurs on adoption of different contingent pay schemes: evidence from Italian firms

Mirella Damiani and Andrea Ricci

No 116/2013, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: In this paper we investigate the influence of education of entrepreneurs, as signal of talent, on the adoption of contingent pay (CP) schemes in Italian manufacturing and service firms, an aspect so far not examined in related literature. We use data of Employer and Employee Survey (EES) for the year 2010 provided from ISFOL (the Italian Institute for the Development of Workers Professional Training) and evaluate to what extent differences in diffusion of CP between Italian firms reflect differences in quality of entrepreneurs. Our estimates, obtained taking account endogeneity and unobserved heterogeneity, validate hypotheses about direct educational positive effects on adoption of CP schemes. Furthermore, we ascertain the role of employers' education by looking at its influence on the choice among different types of CP bonuses, at individual, group, or establishment level. Our results suggest that high educated entrepreneurs are more likely to use individual or collective forms of CP schemes at establisment level, rather than team CP incentives.

Keywords: Contingent pay; Education. (search for similar items in EconPapers)
JEL-codes: I20 J33 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-04-02
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