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Fixed wage or share: Contingent contract renewal and skipper motivation


  • Thorolfur Matthiasson


Fishermen around the world are usually remunerated by shares. Iceland is no exception in that respect. The fixed wage systems,that have been tried out, have been short- lived and their utilization limited. The fundamental question asked in this paper is: Why do almost all vessel owners use the same remuneration principles? The answer offered is that the circumstances under which fishing is conducted play a vital role here. Surveillance of the conduct of employees is almost impossible. Hence, vessel owners must develop some system for motivating workers and to discourage shirking. It is shown that sharing is better than alternative forms of remuneration in that respect. The production unit is a small platform that is not easily abandoned during a trip. The product ofr a given trip is well- defined. All of these factors help to explain the prevalence of sharing in fisheries.

Suggested Citation

  • Thorolfur Matthiasson, 1997. "Fixed wage or share: Contingent contract renewal and skipper motivation," Labor and Demography 9702002, EconWPA.
  • Handle: RePEc:wpa:wuwpla:9702002
    Note: Type of Document - Acrobat file; prepared on WordPerfect 3.5 for the Mac; to print on Apple LaserWriter; pages: 42 4; figures: included

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    References listed on IDEAS

    1. Sugato Bhattacharyya & Francine Lafontaine, 1995. "Double-Sided Moral Hazard and the Nature of Share Contracts," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 761-781, Winter.
    2. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    3. Moene, Karl Ove, 1990. "Is profit sharing a cure for unemployment in less developed countries?," Journal of Development Economics, Elsevier, vol. 33(1), pages 89-99, July.
    4. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-431, July.
    5. Kraft, Kornelius, 1991. "The Incentive Effects of Dismissals, Efficiency Wages, Piece-Rates and Profit-Sharing," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 451-459, August.
    6. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
    7. Matthiasson, Thorolfur, 1999. "Cost sharing and catch sharing," Journal of Development Economics, Elsevier, vol. 58(1), pages 25-44, February.
    8. Lee G. Anderson, 1982. "The Share System in Open-Access and Optimally Regulated Fisheries," Land Economics, University of Wisconsin Press, vol. 58(4), pages 435-449.
    9. Chong-en Bai & Zhigang Tao, 1997. "Contract Mix and Ownership," Boston College Working Papers in Economics 345., Boston College Department of Economics.
    10. D. Gale Johnson, 1950. "Resource Allocation under Share Contracts," Journal of Political Economy, University of Chicago Press, vol. 58, pages 111-111.
    11. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-130, December.
    12. Levine, David, 1987. "Efficiency wages in Weitzman's share economy," Economics Letters, Elsevier, vol. 23(3), pages 245-249.
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    Cited by:

    1. Nguyen, Quang, 2009. "choice of remuneration regime in fisheries: the case of Hawaii’s longline fisheries," MPRA Paper 13792, University Library of Munich, Germany.
    2. Matthiasson, Thorolfur, 1999. "Cost sharing and catch sharing," Journal of Development Economics, Elsevier, vol. 58(1), pages 25-44, February.
    3. Jordi Guillen & Claire Macher & Mathieu Merzéréaud & Jean Boncoeur & Olivier Guyader, 2015. "Effects of the Share Remuneration System on Fisheries Management Targets and Rent Distribution," Marine Resource Economics, University of Chicago Press, vol. 30(2), pages 123-138.

    More about this item


    Remuneration system in fisheries; Contingent Renewal; Skipper Contracts;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L79 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Other
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery


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