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Performance Pay and Productivity (2000)
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| Venue: | AMERICAN ECONOMIC REVIEW |
| Citations: | 486 - 9 self |
BibTeX
@ARTICLE{Lazear00performancepay,
author = {Edward P. Lazear},
title = {Performance Pay and Productivity},
journal = {AMERICAN ECONOMIC REVIEW},
year = {2000},
pages = {1346--1361}
}
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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.
