Performance related pay, productivity and wages in Italy: a quantile regression approach
AbstractThe authors analyzed the role of Performance Related Pay (PRP) in a sample of Italian manufacturing and service firms and presented standard quantile estimates to investigate heterogeneity in pay-performance impacts on labor productivity and wages. In a second stage, the endogeneity of PRP was taken into account by using instrumental variable quantile regression techniques. They find considerable heterogeneity across the distribution of labor productivity and wages, with the highest role of PRP obtained at the lowest and highest quantiles. However, for all quantiles, the comparison of productivity and wage estimates suggests that PRP might not only be rent-sharing devices, but also incentive schemes that substantially lead to efficiency enhancements. These findings are confirmed for firms under union governance and suggest that well designed policies, that circumvent the limited implementation of PRP practices, would guarantee productivity improvement.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 53341.
Date of creation: 30 Jan 2014
Date of revision:
Efficiency; Wages; Performance–related pay; unions;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-08 (All new papers)
- NEP-EFF-2014-02-08 (Efficiency & Productivity)
- NEP-HRM-2014-02-08 (Human Capital & Human Resource Management)
- NEP-LAB-2014-02-08 (Labour Economics)
- NEP-LMA-2014-02-08 (Labor Markets - Supply, Demand, & Wages)
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