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choice of remuneration regime in fisheries: the case of Hawaii’s longline fisheries

  • Nguyen, Quang

One of the most prominent features of remuneration in the Hawaii’s longline fisheries industry has been the norm of share contract regimes. This paper investigates whether the use of share contract regime is positively correlated to increased economic returns. The principal-agent framework is applied to develop a theoretical model for the remuneration choice. Empirical estimation is conducted using a switching regression model that accounts for certain vessel characteristics effects on revenue, depending on remuneration regime used (i.e., share contract or flat wage), as well as the potential selection bias in the vessels’ contractual choice. Key findings from counterfactual simulations indicate: (1) a negative selection into choosing share contracts, and (2) that flat wage vessels would experience significantly higher revenues if they switch to share contracts. Thus, even though the labor market in Hawaii’s longline fisheries relies upon foreign crew members, the results suggest that it would benefit owners of flat wage vessels to apply share contracts to increase their revenues.

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File URL: https://mpra.ub.uni-muenchen.de/13792/1/MPRA_paper_13792.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13792.

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Date of creation: 05 Mar 2009
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Handle: RePEc:pra:mprapa:13792
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  1. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-30, December.
  2. McConnell, Kenneth E. & Price, Michael, 2006. "The lay system in commercial fisheries: Origin and implications," Journal of Environmental Economics and Management, Elsevier, vol. 51(3), pages 295-307, May.
  3. Matthiasson, Thorolfur, 1999. "Cost sharing and catch sharing," Journal of Development Economics, Elsevier, vol. 58(1), pages 25-44, February.
  4. Thorolfur Matthiasson, 1997. "Fixed wage or share: Contingent contract renewal and skipper motivation," Labor and Demography 9702002, EconWPA.
  5. Nigel Key & William McBride, 2003. "Production Contracts and Productivity in the U.S. Hog Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 121-133.
  6. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
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  1. Socio-economics of Fisheries and Aquaculture

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