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Performance Pay and Productivity
Abstract
Much of the theory in personnel economics relates to effects of monetary incentives on output, but the theory was untested because appropriate data were unavailable. A new data set for the Safelite Glass Corporation tests the predictions that average productivity will rise, the firm will attract a more able workforce, and variance in output across individuals at the firm will rise when it shifts to piece rates. In Safelite, productivity effects amount to a 44-percent increase in output per worker. This firm apparently had selected a suboptimal compensation system, as profits also increased with the change. (JEL J00, J22, J3)
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Metadata
- Authors
- Lazear, E. P.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2000-12-01
- Volume
- 90
- Issue
- 5
- Pages
- 1346-1361
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W3122276354
- Cited by
- 2,487
- References
- 2
- FWCI
- 54.33
- Type
- journal article
- Language
- en
- Open access
- closed
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