The Consequences of a Piece Rate on Quantity and Quality: Evidence from a Field Experiment
AbstractThis field experiment examines output quantity and quality for workers in a data input business. We observe two sets of workers that differ in monitoring intensity as they move from time to piece rates. The application of piece rates increases quantity, and we find that the resultant quality can be improved with sufficient monitoring. "Committed" workers also produce higher quantity and quality, showing the role of worker selection - which appears especially strong under time rates. Our results thus show how a firm can refine its worker selection and monitoring options together with the payment system to deliver its chosen quality-quantity combination.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7660.
Length: 36 pages
Date of creation: Sep 2013
Date of revision:
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Find related papers by JEL classification:
- D2 - Microeconomics - - Production and Organizations
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-25 (All new papers)
- NEP-EXP-2013-10-25 (Experimental Economics)
- NEP-HRM-2013-10-25 (Human Capital & Human Resource Management)
- NEP-LAB-2013-10-25 (Labour Economics)
- NEP-LMA-2013-10-25 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Performance Pay and Productivity,"
American Economic Review,
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- Bruce Shearer, 2004. "Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 513-534.
- Glenn MacDonald & Leslie M. Marx, 2001. "Adverse Specialization," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 864-899, August.
- Bruce Shearer, 2004. "Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 513-534, 04.
- Raymond P. Guiteras & B. Kelsey Jack, 2014. "Incentives, Selection and Productivity in Labor Markets: Evidence from Rural Malawi," NBER Working Papers 19825, National Bureau of Economic Research, Inc.
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