Intertemporal Productivity under Fixed Wages and Piece Rates

John Rust (jr1393@georgetown.edu), Bruce Shearer and Harry Paarsch
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Bruce Shearer: Laval University

No 264, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: We construct a stochastic dynamic programming model as the basis of an empirical framework within which to examine the effects of different sequences of work and rest on the daily productivity of workers who planted trees in the province of British Columbia, Canada, comparing the intertemporal productivity profiles of planters who were paid either fixed wages or piece rates. We find that planters who are paid piece rates produce more, on average, than those who are paid fixed wages, but that the productivity of piece-rate planters falls with the number ofconsecutive days worked; the fall in productivity is between three and five percent per day. Fixed-wage planters, on the other hand, showed no such decreases.

Date: 2007
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