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The Trade-Off Between Supervision Cost and Performance Based Pay: Does Gender Matter?

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  • Bradley Ewing

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  • Phanindra Wunnava

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Abstract

The study adds to the literature by providing new empirical evidence consistent with efficiency wage theory,and by providing estimates of the average cost of supervising a worker by industry. This research uses the 1996 wave of the NLSY and incorporates estimates of supervision cost computed from industry classifications. We further detect presence of no gender differences neither in risk-averseness nor in productivity gains associated with cost of supervision and performance-based pay. While the findings imply that employers should consider the incentive effects of supervision and performance based pay when constructing pay schemes, there is no need for employers to devote resources to constructing gender-specific payment mechanisms. Our evidence suggests that profit-maximizing firms should treat males and females equally and develop gender-neutral pay schemes. Copyright Kluwer Academic Publishers 2004

Suggested Citation

  • Bradley Ewing & Phanindra Wunnava, 2004. "The Trade-Off Between Supervision Cost and Performance Based Pay: Does Gender Matter?," Small Business Economics, Springer, vol. 23(5), pages 453-460, December.
  • Handle: RePEc:kap:sbusec:v:23:y:2004:i:5:p:453-460
    DOI: 10.1007/s11187-004-7253-6
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    File URL: http://hdl.handle.net/10.1007/s11187-004-7253-6
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    References listed on IDEAS

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    1. Leonard, Jonathan S, 1987. "Carrots and Sticks: Pay, Supervision, and Turnover," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 136-152, October.
    2. Ewing, Bradley T., 1996. "Wages and performance-based pay: Evidence from the NLSY," Economics Letters, Elsevier, vol. 51(2), pages 241-246, May.
    3. Charles Brown, 1992. "Wage Levels and Method of Pay," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 366-375, Autumn.
    4. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-630, October.
    5. Goldin, Claudia, 1986. "Monitoring Costs and Occupational Segregation by Sex: A Historical Analysis," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 1-27, January.
    6. Daniel Parent, 1999. "Methods of Pay and Earnings: A Longitudinal Analysis," ILR Review, Cornell University, ILR School, vol. 53(1), pages 71-86, October.
    7. David S. Evans & Linda S. Leighton, 1989. "Why Do Smaller Firms Pay Less?," Journal of Human Resources, University of Wisconsin Press, vol. 24(2), pages 299-318.
    8. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    9. Lindbeck, Assar & Snower, Dennis J., 1987. "Efficiency wages versus insiders and outsiders," European Economic Review, Elsevier, vol. 31(1-2), pages 407-416.
    10. Sunden, Annika E & Surette, Brian J, 1998. "Gender Differences in the Allocation of Assets in Retirement Savings Plans," American Economic Review, American Economic Association, vol. 88(2), pages 207-211, May.
    11. Bradley T. Ewing & James E. Payne, 1999. "The Trade-Off Between Supervision and Wages: Evidence of Efficiency Wages from the NLSY," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 424-432, October.
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    Cited by:

    1. Harald Bergsteiner & Gayle Avery, 2012. "When Ethics are Compromised by Ideology: The Global Competitiveness Report," Journal of Business Ethics, Springer, vol. 109(4), pages 391-410, September.
    2. Sessions, John G., 2008. "Wages, supervision and sharing," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(4), pages 653-672, November.

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