Salaries and Piece Rates

摘要: Compensation can take many forms. Remuneration come as pecuniary payments, fringes such health and pension benefits, or a nonpecuniary reward plush office furniture that costs the firm less than it benefits worker. A significant literature has examined trade-offs between compensation, modern work having been pioneered by Rosen (1974). More recently, another body of selection method total ignoring distinction payment. This focused on risk incentive factors. It resulted in comparisons compensation based absolute output levels to relative performance.' also led explorations relation experience over life.2 Little attention paid what may be among most important obvious methods namely, choice fixed salary for some period time, is, paying basis input Some workers receive is specified advance not directly contingent performance. Instead, depends an measure, hours worked. For others, related output. essay attempt predict firm's method. Piece rates are defined more rigorously. Among factors discussed worker heterogeneity, incentives, sorting considerations, monitoring costs, asymmetric information. One result tend lower quality homogeneous their piece-rate counterparts. Numerous additional results provided. * Helpful comments Victoria Lazear Yoram Weiss gratefully acknowledged. Support was provided Department Labor National Science Foundation. 1. See (1981), Stiglitz Holmstrom (1982), Green Stokey (1983). 2. (1979, 1981) Harris (in press).