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

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Author Info
Bruce S. Shearer ()
Abstract

Data from a field experiment are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages. The experiment was conducted within a tree-planting firm and provides daily observations on individual worker productivity under both copensation systems. Unrestricted statistical methods estimate the productivity gain to be 20%. Since planting conditions potentially affect incentives, structural econometric methods are used to generalize the experimental results to out-of-samples conditions. The structural results suggest that the average productivity gain, outside of the experimental conditions, would be at least 21.7%.

Des données expérimentales sont utilisées afin de mesurer le gain en productivité réalisé quand des travailleurs sont payés à la pièce plutôt qu'à taux fixe. L'expérience a été complétée dans une entreprise qui s'occupe de plantation d'arbres et fournit des observations quotidiennes sur la productivité individuelle de chaque travailleur sous les deux systèmes de compensation. Des méthodes statistiques sans restriction mesurent le gain en productivité à 20%. Étant donnée que les conditions de plantation affectent potentiellement la productivité, les méthodes structurelles sont utilisées afin de généraliser les résultats en dehors de l'expérience. Les résultats structurels suggèrent que le gain en productivité, en dehors des conditions expérimentales, sera au moins de 21.7%.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2003s-48.

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Date of creation: 01 Aug 2003
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Handle: RePEc:cir:cirwor:2003s-48

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Related research
Keywords: Econometrics of Contracts; Incentives; Experiments; Économétrie des contrats; incitations; expériences;

Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
C9 - Mathematical and Quantitative Methods - - Design of Experiments

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