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Is Seniority-Based Pay used as a Motivation Device? Evidence from Plant Level Data

Author

Listed:
  • Alberto Bayo-Moriones
  • José Enrique Galdón-Sánchez
  • Maia Güell

Abstract

In this paper we use data from industrial plants to investigate if seniority-based pay is used as a motivational device for production workers. Alternatively, seniority-based pay could simply be a wage setting rule not necessarily related to the provision of incentives. Unlike previous papers, we use a direct measure of seniority-based pay as well as measures of monitoring devices and piece-rates. We find that firms that offer seniority-based pay are less likely to offer explicit incentives. They are also less likely to invest in monitoring devices. We also find that firms that offer seniority-based pay are more likely to engage in other human resource management policies that result in long employment relationships. Overall these results suggest that seniority-based pay is indeed used as a motivation device.

Suggested Citation

  • Alberto Bayo-Moriones & José Enrique Galdón-Sánchez & Maia Güell, 2004. "Is Seniority-Based Pay used as a Motivation Device? Evidence from Plant Level Data," Working Papers 138, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:138
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    Cited by:

    1. Ando, Munetomo & Kobayashi, Hajime, 2008. "Intergenerational conflicts of interest and seniority systems in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 757-767, March.
    2. Alberto Bayo-Moriones & Jose E. Galdon-Sanchez & Sara Martinez-de-Morentin, 2017. "Performance Measurement and Incentive Intensity," Journal of Labor Research, Springer, vol. 38(4), pages 496-546, December.

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    More about this item

    Keywords

    Human Resource managament practices; Incentives; Monitoring;
    All these keywords.

    JEL classification:

    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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