One of the most prominent features of remuneration in the Hawaii’s longline fisheries industry has been the norm of share contract regimes. This paper investigates whether the use of share contract regime is positively correlated to increased economic returns. The principal-agent framework is applied to develop a theoretical model for the remuneration choice. Empirical estimation is conducted using a switching regression model that accounts for certain vessel characteristics effects on revenue, depending on remuneration regime used (i.e., share contract or flat wage), as well as the potential selection bias in the vessels’ contractual choice. Key findings from counterfactual simulations indicate: (1) a negative selection into choosing share contracts, and (2) that flat wage vessels would experience significantly higher revenues if they switch to share contracts. Thus, even though the labor market in Hawaii’s longline fisheries relies upon foreign crew members, the results suggest that it would benefit owners of flat wage vessels to apply share contracts to increase their revenues.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
13792.
Find related papers by JEL classification: B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
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