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What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies

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  • Canice Prendergast

Abstract

with the compensation policies of firms. This literature is considered from the perspective of three major theories: human capital, learning, and incentives. Considerable empirical work has addressed each of these theories with some success. However, our understanding of the effect of compensation on behavior and of the motivations for firms in choosing certain policies has been constrained by two important problems. First, the absence of data on contracts and performance has limited the ability of researchers to ask even the most basic question, Do Incentives Matter? Second, the available theoretical work has not been sufficiently orientated towards distinguishing between plausible alternatives, so that many observed facts are consistent with any of the major theories.

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  • Canice Prendergast, 1996. "What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies," NBER Working Papers 5802, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5802
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    Cited by:

    1. Fredrik Andersson & Clair Brown & Benjamin Campbell & Hyowook Chiang & Yooki Park, 2008. "The Effect of HRM Practices and R&D Investment on Worker Productivity," NBER Chapters,in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 19-43 National Bureau of Economic Research, Inc.
    2. Peter Egger & Doina Maria Radulescu, 2011. "Labor Taxation and Foreign Direct Investment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(3), pages 603-636, September.
    3. Dackehag, Margareta & Hansson, Åsa, 2015. "Taxation of Dividend Income and Economic Growth: The Case of Europe," Working Papers 2015:24, Lund University, Department of Economics.
    4. Rajesh K. Aggarwal & Andrew A. Samwick, 2003. "Performance Incentives within Firms: The Effect of Managerial Responsibility," Journal of Finance, American Finance Association, vol. 58(4), pages 1613-1650, August.
    5. van Dijk, Frans & Sonnemans, Joep & van Winden, Frans, 2001. "Incentive systems in a real effort experiment," European Economic Review, Elsevier, vol. 45(2), pages 187-214, February.
    6. Felipe Balmaceda, "undated". "Compensation Methods in Competitive Labor Markets," ILADES-Georgetown University Working Papers inv118, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    7. Marco Delmastro, 2002. "On the choice of incentives in firms: influence activity, monitoring technology and organizational structure," Economics Bulletin, AccessEcon, vol. 12(2), pages 1-13.
    8. Michael L. Lemmon & James S. Schallheim & Jaime F. Zender, 2000. "Do Incentives Matter? Managerial Contracts for Dual-Purpose Funds," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 273-299, April.
    9. Vera Brenčič, 2015. "Employers' Efforts to Deter Shirking in Teams: Evidence from Job Vacancies," LABOUR, CEIS, vol. 29(1), pages 52-78, March.
    10. Felipe Balmaceda, 2002. "Compensation Methods in a Competitive Labor Market: the Role of Asymmetric Information," Documentos de Trabajo 139, Centro de Economía Aplicada, Universidad de Chile.
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    12. repec:ebl:ecbull:v:12:y:2002:i:2:p:1-13 is not listed on IDEAS
    13. Frijters, Paul, 2000. "The sale of relational capital through tenure profiles and tournaments," Labour Economics, Elsevier, vol. 7(4), pages 373-384, July.
    14. Dackehag , Margareta & Hansson, Åsa, 2012. "Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries," Working Papers 2012:6, Lund University, Department of Economics.

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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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