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The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing

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  • Hart, Robert A.
  • Roberts, J. Elizabeth

Abstract

Based on detailed payroll data of blue collar male and female labor in Britain’s engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build up to WWII and during the war itself. We account for the very significant decline in the differentials after the war. Labor market topics include piecework pay in respect of compensating differentials, labor heterogeneity, and the transaction costs of pricing piecework output.

Suggested Citation

  • Hart, Robert A. & Roberts, J. Elizabeth, 2014. "The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing," SIRE Discussion Papers 2014-023, Scottish Institute for Research in Economics (SIRE).
    • Handle: RePEc:edn:sirdps:574
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    References listed on IDEAS

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    1. Robert A. Hart & J. Elizabeth Roberts, 2013. "Industrial Composition, Methods of Compensation and Real Earnings in the Great Depression," National Institute Economic Review, National Institute of Economic and Social Research, vol. 226(1), pages 17-29, November.
    2. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-480, March.
    3. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-431, July.
    4. Charles Brown, 1990. "Firms' Choice of Method of Pay," ILR Review, Cornell University, ILR School, vol. 43(3), pages 165-1-182-, April.
    5. Hart, Robert A., 2007. "Women doing men's work and women doing women's work: Female work and pay in British wartime engineering," Explorations in Economic History, Elsevier, vol. 44(1), pages 114-130, January.
    6. Salhi, Said & Rand, Graham K., 1993. "Incorporating vehicle routing into the vehicle fleet composition problem," European Journal of Operational Research, Elsevier, vol. 66(3), pages 313-330, May.
    7. Robert A. Hart & J. Elizabeth Roberts, 2013. "Real wage cyclicality and the Great Depression: evidence from British engineering and metal working firms," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 197-218, April.
    8. 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.
    9. Susan Helper & Morris M. Kleiner & Yingchun Wang, 2010. "Analyzing Compensation Methods in Manufacturing: Piece Rates, Time Rates, or Gain-Sharing?," NBER Working Papers 16540, National Bureau of Economic Research, Inc.
    10. Seiler, Eric, 1984. "Piece Rate vs. Time Rate: The Effect of Incentives on Earnings," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 363-376, August.
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    1. The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing
      by maximorossi in NEP-LTV blog on 2013-11-27 18:45:31

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    Keywords

    Piecework – timework hourly pay differentials; output fluctuations; labor heterogeneity; output pricing;
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