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What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies

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  • Canice Prendergast
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    Abstract

    with the compensation policies of firms. This literature is considered from the perspective of three major theories: human capital, learning, and incentives. Considerable empirical work has addressed each of these theories with some success. However, our understanding of the effect of compensation on behavior and of the motivations for firms in choosing certain policies has been constrained by two important problems. First, the absence of data on contracts and performance has limited the ability of researchers to ask even the most basic question, Do Incentives Matter? Second, the available theoretical work has not been sufficiently orientated towards distinguishing between plausible alternatives, so that many observed facts are consistent with any of the major theories.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5802.

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    Date of creation: Oct 1996
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    Publication status: published as What Happens within Firms? A Survey of Empirical Evidence on Compensation Policies , Canice Prendergast. in Labor Statistics Measurement Issues , Haltiwanger, Manser, and Topel. 1998
    Handle: RePEc:nbr:nberwo:5802

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    Cited by:
    1. Peter Egger & Doina Maria Radulescu, 2008. "Labour Taxation and Foreign Direct Investment," CESifo Working Paper Series 2309, CESifo Group Munich.
    2. Rajesh K. Aggarwal & Andrew A. Samwick, 1999. "Performance Incentives Within Firms: The Effect of Managerial Responsibility," NBER Working Papers 7334, National Bureau of Economic Research, Inc.
    3. repec:ebl:ecbull:v:12:y:2002:i:2:p:1-13 is not listed on IDEAS
    4. van Dijk, Frans & Sonnemans, Joep & van Winden, Frans, 2001. "Incentive systems in a real effort experiment," European Economic Review, Elsevier, vol. 45(2), pages 187-214, February.
    5. Dackehag , Margareta & Hansson, Åsa, 2012. "Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries," Working Papers 2012:6, Lund University, Department of Economics.
    6. Paul Frijters, 1998. "The sale of relational capital through tenure profiles and tournaments," Discussion Papers Series 443, School of Economics, University of Queensland, Australia.
    7. Felipe Balmaceda, . "Compensation Methods in Competitive Labor Markets," ILADES-Georgetown University Working Papers inv118, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    8. Marco Delmastro, 2002. "On the choice of incentives in firms: influence activity, monitoring technology and organizational structure," Economics Bulletin, AccessEcon, vol. 12(2), pages 1-13.
    9. Barron, John M. & Waddell, Glen R., 2008. "Work hard, not smart: Stock options in executive compensation," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 767-790, June.
    10. Fredrik Andersson & Clair Brown & Benjamin Campbell & Hyowook Chiang & Yooki Park, 2008. "The Effect of HRM Practices and R&D Investment on Worker Productivity," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 19-43 National Bureau of Economic Research, Inc.
    11. Felipe Balmaceda, 2002. "Compensation Methods in a Competitive Labor Market: the Role of Asymmetric Information," Documentos de Trabajo 139, Centro de Economía Aplicada, Universidad de Chile.

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