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The Choice of Payment Schemes: Australian Establishment Data


  • Robert W Drago

    () (University of Wisconsin - Milwaukee)

  • John S. Heywood


We use Australian establishment data to estimate the determinants of incentive schemes. Hypotheses are drawn from the new economics of personnel and the strategic choice literatures. Larger firms are more likely to use individual schemes such as piece rates. Firms where female workers predominate or those facing stiff product market competition are more likely to use both piece rates and profit sharing. We also isolate the effects of monitoring, job security, and the industrial relations climate.

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  • Robert W Drago & John S. Heywood, 1995. "The Choice of Payment Schemes: Australian Establishment Data," Working papers _006, University of Wisconsin - Milwaukee.
  • Handle: RePEc:wop:wimihp:_006

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    1. Gregg, P. A. & Machin, S. J., 1988. "Unions and the incidence of performance linked pay schemes in Britain," International Journal of Industrial Organization, Elsevier, vol. 6(1), pages 91-107, March.
    2. Goldin, Claudia, 1986. "Monitoring Costs and Occupational Segregation by Sex: A Historical Analysis," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 1-27, January.
    3. Garen, John E, 1985. "Worker Heterogeneity, Job Screening, and Firm Size," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 715-739, August.
    4. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    5. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    6. Oliver Hart & Bengt Holmstrom, 1986. "The Theory of Contracts," Working papers 418, Massachusetts Institute of Technology (MIT), Department of Economics.
    7. Richard B. Freeman, 1982. "Union Wage Practices and Wage Dispersion within Establishments," ILR Review, Cornell University, ILR School, vol. 36(1), pages 3-21, October.
    8. Charles Brown, 1990. "Firms' Choice of Method of Pay," ILR Review, Cornell University, ILR School, vol. 43(3), pages 165-1-182-, April.
    9. Dale Belman & John Heywood, 1988. "Incentive schemes and racial wage discrimination," The Review of Black Political Economy, Springer;National Economic Association, vol. 17(1), pages 47-56, June.
    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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