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Ownership, Agency and Wages: An Examination in the Fast Food Industry

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  • Alan B. Krueger

Abstract

This paper estimates the difference in compensation between company-owned and franchisee-owned fast food restaurants. The contrast is of interest because contractual arrangements give managers of company-owned outlets less of an incentive to monitor and supervise employees. Estimates based on two data sets suggest that employee compensation is slightly greater at company-owned outlets than franchisee-owned outlets. The earnings gap is 9 percent for assistant and shift managers and 2 percent for full-time crew workers. Furthermore. the tenure-earnings profile is steeper at company-owned restaurants. These findings suggest that monitoring difficulties influence the timing and generosity of compensation.

Suggested Citation

  • Alan B. Krueger, 1990. "Ownership, Agency and Wages: An Examination in the Fast Food Industry," NBER Working Papers 3334, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3334
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    Cited by:

    1. Michael Ian Cragg, 1995. "Performance Incentives in Government Subcontracting: Evidence from the Job Training Partnership Act (JTPA)," Labor and Demography 9507001, EconWPA.

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    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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