IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/v9y1991i1p25-44.html
   My bibliography  Save this article

Time, Salary, and Incentive Payoffs in Labor Contracts

Author

Listed:
  • Fama, Eugene F

Abstract

Time (hourly payoffs) and salary (the payoff does not vary with hours) account for the bulk of the payoffs on labor contracts. This article argues that the choice between time and salary centers on the presence (time) or absence (salary) of information about flows of effort or output per unit time. Without information about the flow of hourly effort or output, payoffs for time give the workers an incentive to supply hours without effort. Time can then become uninformative about output. In this situation, if the contract includes a fixed payoff, it is likely to be a salary rather than a payoff for time. Copyright 1991 by University of Chicago Press.

Suggested Citation

  • Fama, Eugene F, 1991. "Time, Salary, and Incentive Payoffs in Labor Contracts," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 25-44, January.
  • Handle: RePEc:ucp:jlabec:v:9:y:1991:i:1:p:25-44
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/298257
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JOLE for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Abowd, John M & Card, David, 1987. "Intertemporal Labor Supply and Long-term Employment Contracts," American Economic Review, American Economic Association, vol. 77(1), pages 50-68, March.
    2. Ashenfelter, Orley, 1984. "Macroeconomic analyses and microeconomic analyses of labor supply," Carnegie-Rochester Conference Series on Public Policy, Elsevier, pages 117-156.
    3. Lillard, Lee & Smith, James P & Welch, Finis, 1986. "What Do We Really Know about Wages? The Importance of Nonreporting and Census Imputation," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 489-506, June.
    4. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    5. Orley Ashenfelter, 1984. "Macroeconomic Analyses and Microeconomic Analyses of Labor Supply," Working Papers 553, Princeton University, Department of Economics, Industrial Relations Section..
    6. Orley Ashenfelter & Gary Solon, 1982. "Longitudinal Labor Market Data: Sources, Uses, and Limitations," Working Papers 535, Princeton University, Department of Economics, Industrial Relations Section..
    7. Duncan, Greg J & Hill, Daniel H, 1985. "An Investigation of the Extent and Consequences of Measurement Error in Labor-Economic Survey Data," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 508-532, October.
    8. Griliches, Zvi, 1974. "Errors in Variables and Other Unobservables," Econometrica, Econometric Society, vol. 42(6), pages 971-998, November.
    9. repec:pri:indrel:dsp014m90dv50s is not listed on IDEAS
    10. repec:fth:prinin:155 is not listed on IDEAS
    11. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    12. Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 176-215, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert A. Shumsky & Edieal J. Pinker, 2003. "Gatekeepers and Referrals in Services," Management Science, INFORMS, vol. 49(7), pages 839-856, July.
    2. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
    3. Fernando Lozano, 2010. "Understanding the workweek of foreign born workers in the United States," Review of Economics of the Household, Springer, vol. 8(1), pages 83-104, March.
    4. Daniel S. Hamermesh, 2002. "12 Million Salaried Workers are Missing," ILR Review, Cornell University, ILR School, vol. 55(4), pages 649-666, July.
    5. Garen, John, 1998. "Self-employment, pay systems, and the theory of the firm: An empirical analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 257-274, August.
    6. Hart, Robert A & Roberts, J Elizabeth, 2013. "The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing," Stirling Economics Discussion Papers 2013-12, University of Stirling, Division of Economics.
    7. Henneberger, Fred & Sousa-Poza, Alfonso & Ziegler, Alexandre, 2007. "Performance Pay, Sorting, and Outsourcing," IZA Discussion Papers 3019, Institute for the Study of Labor (IZA).
    8. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    9. Antti Kauhanen & Sami Napari, 2012. "Performance Measurement and Incentive Plans," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(3), pages 645-669, July.
    10. Matthias Krakel, 2006. "Tournaments versus Piece Rates under Limited Liability," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 5(3), pages 185-199, December.
    11. Hart, Robert A., 2008. "Piece work pay and hourly pay over the cycle," Labour Economics, Elsevier, vol. 15(5), pages 1006-1022, October.
    12. Chen Liang & Yili Hong & Bin Gu, 2016. "Effects of IT-enabled Monitoring on Labor Contracting in Online Platforms: Evidence from a Natural Experiment," Working Papers 16-01, NET Institute.
    13. Johnson, Marilyn F. & Nelson, Karen K. & Shackell, Margaret B., 2001. "An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation," Research Papers 1679, Stanford University, Graduate School of Business.
    14. Frank Figge, 2004. "Stakeholder und Unternehmensrisiko," Risk and Insurance 0408001, EconWPA.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:9:y:1991:i:1:p:25-44. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division). General contact details of provider: http://www.journals.uchicago.edu/JOLE/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.