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Opportunity Counts: Teams and the Effectiveness of Production Incentives

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  • Brent Boning
  • Casey Ichniowski
  • Kathryn Shaw

Abstract

Using unique panel data on production lines in U.S. minimills, we analyze the adoption of problem-solving teams and group incentive pay and their effects on productivity. Almost every line ultimately adopts group incentives. However, problem-solving teams are found almost exclusively in lines with more complex production processes. Consistent with these patterns, fixed-effects models reveal increased productivity under group incentives in all lines, while teams raise productivity in lines with more complex production processes. This evidence indicates that teams give workers a valuable opportunity to solve problems in more complex production processes, while standard operating procedures appear to suffice elsewhere.

Suggested Citation

  • Brent Boning & Casey Ichniowski & Kathryn Shaw, 2007. "Opportunity Counts: Teams and the Effectiveness of Production Incentives," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 613-650.
  • Handle: RePEc:ucp:jlabec:v:25:y:2007:p:613-650
    DOI: 10.1086/519539
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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