Review of Economic Studies Vol. 71 No. 2 2004
Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment
Abstract
Data from a field experiment are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages. The experiment was conducted within a tree-planting firm and provides daily observations on individual worker productivity under both compensation systems. Unrestricted statistical methods estimate the productivity gain to be 20%. Since planting conditions potentially affect incentives, structural econometric methods are used to generalize the experimental results to out-of-sample conditions. The structural results suggest that the average productivity gain, outside of the experimental conditions, would be at least 21.7%.
- DOI
- 10.1111/0034-6527.00294
- Volume
- 71
- Issue
- 2
- Pages
- 513-534
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib