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The Response of Worker Effort to Piece Rates: Evidence from the Midwest Logging Industry

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  • M. Ryan Haley

Abstract

Using firm-level payroll data from the Midwest logging industry, I compute a worker’s productivity response to a change in piece-rate pay, an elasticity of effort, using an empirical specification developed in Paarsch and Shearer (1999). Maximum-likelihood estimation of an agency-based structural econometric model of worker choice yields elasticities ranging from 0.413 to 1.507. These estimates are smaller than, but qualitatively similar to, those reported in Paarsch and Shearer, suggesting that their model has perhaps more general applicability than their British Columbia tree-planting example.

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  • M. Ryan Haley, 2003. "The Response of Worker Effort to Piece Rates: Evidence from the Midwest Logging Industry," Journal of Human Resources, University of Wisconsin Press, vol. 38(4).
  • Handle: RePEc:uwp:jhriss:v:38:y:2003:i:4:p881-890
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    1. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
    2. Harry J. Paarsch & Bruce S. Shearer, 1999. "The Response of Worker Effort to Piece Rates: Evidence from the British Columbia Tree-Planting Industry," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 643-667.
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    Cited by:

    1. 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.
    2. Hyejin Ku, 2014. "Fair Trade in the Fields of Florida: The Impact of the Penny-Per-Pound on Tomato Pickers," CReAM Discussion Paper Series 1416, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    3. 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.
    4. Shingo Takahashi & Hideo Owan & Tsuyoshi Tsuru & Katsuhito Uehara, 2014. "Perceptions to climatic changes and cooperative attitudes toward flood protection in Bangladesh," Working Papers EMS_2014_11, Research Institute, International University of Japan.
    5. Christophe Lemiére & Gaute Torsvik & Ottar Mæstad & Christopher H. Herbst & Kenneth L. Leonard, 2013. "Evaluating the Impact of Results-Based Financing on Health Worker Performance: Theory, Tools and Variables to Inform an Impact Evaluation," Health, Nutrition and Population (HNP) Discussion Paper Series 98269, The World Bank.
    6. Rupayan Pal, 2011. "Union-Firm Bargaining Under Alternative Pay Schemes: Does Performance Related Pay Fair Better?," Working Papers id:3803, eSocialSciences.
    7. Harald Dale-Olsen, 2014. "Sickness Absence, Sick Leave Pay, and Pay Schemes," LABOUR, CEIS, vol. 28(1), pages 40-63, March.
    8. Paarsch, Harry J. & Shearer, Bruce S., 2007. "Do women react differently to incentives? Evidence from experimental data and payroll records," European Economic Review, Elsevier, vol. 51(7), pages 1682-1707, October.
    9. Bryson, Alex & Dale-Olsen, Harald, 2017. "Does Sick Pay Affect Workplace Absence?," IZA Discussion Papers 11222, Institute for the Study of Labor (IZA).
    10. Rupayan Pal, 2005. "Choice of union-firm bargaining agenda and social welfare," Public Economics 0507014, EconWPA.
    11. Harry J. Paarsch & Bruce S. Shearer, 2004. "Male-Female Productivity Differentials: the Role of Ability and Incentives (revised)," Cahiers de recherche 0410, CIRPEE.
    12. Takahashi, Shingo & Owan, Hideo & Tsuru, Tsuyoshi & Uehara, Katsuhito, 2014. "Multitasking Incentives and Biases in Subjective Performance Evaluation," Discussion Paper Series 614, Institute of Economic Research, Hitotsubashi University.
    13. Paarsch, Harry J. & Shearer, Bruce S., 2004. "Male-Female Productivity Differentials: the Role of Ability and Incentives," Cahiers de recherche 0401, Université Laval - Département d'économique.
    14. Heywood, John S. & Wei, Xiangdong & Ye, Guangliang, 2011. "Piece rates for professors," Economics Letters, Elsevier, vol. 113(3), pages 285-287.

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