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Piece rates and workplace injury: Does survey evidence support Adam Smith?

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  • Keith Bender
  • Colin Green
  • John Heywood

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Abstract

While piece rates are routinely associated with greater productivity and higher wages, they may also generate unanticipated effects. This paper uses cross-country European data to provide among the first broad survey evidence of a strong link between piece rates and workplace injury. Despite unusually good controls for workplace hazards, job characteristics and worker effort, workers on piece rates suffer a large 5 percentage point greater likelihood of injury. As injury rates are typically not controlled for when estimating the premium to piece rates, this raises the specter that a portion of the return to piece rates reflects a compensating wage differential for risk of injury.
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Suggested Citation

  • Keith Bender & Colin Green & John Heywood, 2012. "Piece rates and workplace injury: Does survey evidence support Adam Smith?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 569-590, January.
  • Handle: RePEc:spr:jopoec:v:25:y:2012:i:2:p:569-590 DOI: 10.1007/s00148-011-0393-5
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    Citations

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    Cited by:

    1. Bryson, Alex & Clark, Andrew E. & Freeman, Richard B. & Green, Colin P., 2016. "Share capitalism and worker wellbeing," Labour Economics, Elsevier, pages 151-158.
    2. Keith A. Bender & Alex Bryson, 2013. "Performance Pay: Trends and Consequences Introduction," National Institute Economic Review, National Institute of Economic and Social Research, vol. 226(1), pages 1-3, November.
    3. Böckerman, Petri & Bryson, Alex & Ilmakunnas, Pekka, 2012. "Does high involvement management improve worker wellbeing?," Journal of Economic Behavior & Organization, Elsevier, pages 660-680.
    4. Cecilia Navarra & Ermanno Tortia, 2014. "Employer Moral Hazard, Wage Rigidity, and Worker Cooperatives: A Theoretical Appraisal," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 707-726.
    5. Uwe Jirjahn & Jens Mohrenweiser, 2015. "Performance Pay and Applicant Screening," Research Papers in Economics 2015-11, University of Trier, Department of Economics.
    6. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2011. "The Effect of Variable Pay Schemes on Workplace Absenteeism," IZA Discussion Papers 5941, Institute for the Study of Labor (IZA).
    7. Francis Green & Alan Felstead & Duncan Gallie & Hande Inanc, 2016. "Job-Related Well-Being Through the Great Recession," Journal of Happiness Studies, Springer, vol. 17(1), pages 389-411, February.

    More about this item

    Keywords

    Piece rate; Injury; Incentives; J33; J28;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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