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Does high involvement management lead to higher pay?

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  • Petri Böckerman
  • Alex Bryson
  • Pekka Ilmakunnas

Abstract

Using nationally representative survey data for Finnish employees linked to register data on their wages and work histories we find wage effects of high involvement management (HIM) practices are generally positive and significant. However, employees with better wage and work histories are more likely to enter HIM jobs. The wage premium falls substantially having accounted for employees’ work histories suggesting that existing studies’ estimates are upwardly biased due to positive selection into HIM. Results do not differ significantly when using propensity score matching as opposed to standard regression techniques. The premium rises with the number of HIM practices and differs markedly across different types of HIM practice.

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File URL: http://eprints.lse.ac.uk/38575/
File Function: Open access version.
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 38575.

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Length: 33 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:ehl:lserod:38575

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Keywords: wages; high involvement management; high performance work system; incentive pay; training; team working; information sharing; propensity score matching;

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  1. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
  2. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  3. Markus Frölich, 2004. "Finite-Sample Properties of Propensity-Score Matching and Weighting Estimators," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 77-90, February.
  4. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
  5. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September.
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  7. Abadie, Alberto & Imbens, Guido W., 2011. "Bias-Corrected Matching Estimators for Average Treatment Effects," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(1), pages 1-11.
  8. Paul Osterman, 2006. "Wage effects of high performance work organization in manufacturing," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(2), pages 187-204, January.
  9. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
  10. Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options," NBER Books, National Bureau of Economic Research, Inc, number krus08-1, octubre-d.
  11. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
  12. Alex Bryson & Rafael Gomez & Tobias Kretschmer & Paul Willman, 2007. "The diffusion of workplace voice and high-commitment human resource management practices in Britain, 1984–1998," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 395-426, June.
  13. Harvie Ramsay & Dora Scholarios & Bill Harley, 2000. "Employees and High-Performance Work Systems: Testing inside the Black Box," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 501-531, December.
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