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Piece-Rates, Principal-Agent Models, and Productivity Profiles: Parametric and Semi-Parametric Evidence from Payroll Records

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  • Bruce Shearer
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    Abstract

    This paper uses data on the wages received by piece-rate workers to estimate worker productivity profiles. The data were collected from the payroll records of a British Columbia copper mine. The advantage of these data is the close link between observed wages and worker productivity. An explicit model is used to control for worker effort as a function of observable worker characteristics and the parameters of the compensation system. The model implies a censored wage distribution, the parameters of which can be estimated using well-known econometric techniques. Semi-parametric estimation allows for the relaxation of the distributional assumptions of the model. Results suggest that while productivity profiles were increasing concave functions of tenure, they were also very flat. I relate these results to historical arguments on the skill-saving nature of technological change in the mining industry at the end of the nineteenth century.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 31 (1996)
    Issue (Month): 2 ()
    Pages: 275-303

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    Handle: RePEc:uwp:jhriss:v:31:y:1996:i:2:p:275-303

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Harry J. Paarsch & Bruce S. Shearer, 2004. "Male-Female Productivity Differentials: The Role of Ability and Incentives," CIRANO Working Papers, CIRANO 2004s-17, CIRANO.
    2. Richard B. Freeman & Morris M. Kleiner, 1998. "The Last American Shoe Manufacturers: Changing the Method of Pay to Survive Foreign Competition," NBER Working Papers 6750, National Bureau of Economic Research, Inc.
    3. Pekka Ilmakunnas & Mika Maliranta & Jari Vainiomäki, 2004. "The Roles of Employer and Employee Characteristics for Plant Productivity," Journal of Productivity Analysis, Springer, Springer, vol. 21(3), pages 249-276, May.
    4. Luke, Nancy & Munshi, Kaivan, 2011. "Women as agents of change: Female income and mobility in India," Journal of Development Economics, Elsevier, Elsevier, vol. 94(1), pages 1-17, January.
    5. Harry J. Paarsch & Bruce S. Shearer, 2004. "Male-Female Productivity Differentials: the Role of Ability and Incentives (revised)," Cahiers de recherche, CIRPEE 0410, CIRPEE.

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