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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    1. 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.
    2. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, vol. 51(1), pages 7-45, January.
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