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

  • Bayo-Moriones, Alberto

    ()

    (University of Navarra)

  • Galdon-Sanchez, Jose Enrique

    ()

    (Universidad Pública de Navarra)

  • Güell, Maia

    ()

    (University of Edinburgh)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1321.

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Length: 33 pages
Date of creation: Sep 2004
Date of revision:
Publication status: published in: Research in Labor Economics, 2010, 30, 155-187
Handle: RePEc:iza:izadps:dp1321
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