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We draw upon relational demography and social identity perspectives to argue that working with teammates who are dissimilar in pay grade can help individual team members reduce social uncertainty in their work relationships within the team, subsequently influencing their identification with the team, performance, and turnover intention. This effect is more pronounced for team members in a lower pay grade because they are more sensitive to social influence owing to their lower status in the team. We test these arguments through a three-part survey of 203 employees from 33 work teams of a telecommunication company in China. Our data show that pay grade dissimilarity is associated with lower relational uncertainty, more for individuals with a lower pay grade, and that lower relational uncertainty, in turn, is associated with higher task performance, higher identification with the team, and lower intent to leave the team. This paper contributes to the literature on pay dispersion by highlighting the importance of relative pay, especially for individuals who are lower paid than others, and uncovering the social identity-related process underlying its effects. Post hoc analysis suggests that these effects are present especially when the pay system is perceived to be legitimate. [ABSTRACT FROM AUTHOR]

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Using Panel Study of Income Dynamics (PSID) data, the authors analyze changes in wage differentials between white men and women over time and across the entire wage distribution. The authors decompose distributional changes in the gender wage gap to assess the contribution of observed characteristics measuring individual productivity. They find that the gender wage gap narrowed by 16% at the lowest decile and by less than 5% at the highest decile. The decomposition results indicate that changes in the gender wage gap are mainly attributable to changes in educational attainment at the top of the wage distribution, with a sizable part due to work history changes at the bottom. The findings further reveal that the accuracy of the results depends on the direction in which the decompositions are performed. [ABSTRACT FROM AUTHOR]

Economic policies must be subjected to scrutiny to allow successful policies to be reproduced and mistakes to be reversed. In Mexico, legislation that made the labor market more flexible was implemented and sufficient time has now passed to determine the effect this legislation has had on wages. The objective of this article is to estimate the impact of labor legislation on the wage gap between workers with written contracts and workers without written contracts, including both temporary and permanent workers. To this end, the difference-in-differences (DID) method was used to ascertain the causal impact of the labor legislation. Findings are interpreted within a framework described by Jaime Ros (Márquez and Ros, 1990; Ros, 2004 and 2019), one which is relevant to an economy with a labor surplus and the need for large investments to address low growth rates. [ABSTRACT FROM AUTHOR]

Quota-based bonuses and commissions are the two most common incentive compensation plans. The authors uncover differential effects of these plans from a natural field-based experiment featuring 14,000 monthly observations over three years from 458 sales territories of a pharmaceutical firm that switched from a bonus plan to an equivalent commission plan. The intervention led to significant sales productivity improvement; this effect was heterogeneous across ability deciles, with much larger increases occurring at lower ability deciles. The authors find significant differences across these plans on (1) effort against nonincentivized tasks and (2) output fluctuations induced through 'timing games.' At this firm, the bonus plan was strictly inferior to the implemented commission plan with respect to short-term revenues and timing games. In contrast, the commission plan induced greater neglect of nonincentivized tasks (tasks not directly affecting observable output). To organize their findings, the authors build a simple theoretical model in the personnel economics tradition. The novel result that multitasking concerns are reduced under bonus plans when the quota has been met provides a nuanced rationale for the widespread existence of lump-sum bonus plans. [ABSTRACT FROM AUTHOR]

I develop measures of firm-level pay disparity and examine their relation to firm performance. Using comprehensive compensation data for a large sample of firms, I find no statistically significant relation between the ratio of CEO-to-mean employee compensation and performance. I next create empirical models that allow me to separate the components of CEO and employee compensation explained by economic factors from those that are not, and use these models to estimate explained and unexplained pay disparity. After validating my estimate of unexplained pay disparity as a proxy for pay fairness, I find robust evidence of a negative (positive) relation between unexplained (explained) pay disparity and future firm performance. JEL Classifications: G32; G35; J31; M12; M14; M52. [ABSTRACT FROM AUTHOR]

Many organizations whose core purpose is to advance a social mission pay employees below-market wages. We investigate two under-appreciated benefits of below-market pay in these social-mission organizations. In a series of experiments, we predict and find that, holding employees' outside opportunities constant, those attracted to social-mission organizations that pay below-market wages perform better individually and cooperate more effectively in teams than those attracted to social-mission organizations that pay higher wages. The individual performance effect arises because below-market pay facilitates the selection of value-congruent employees who are naturally inclined to work hard for the organizational mission. The team cooperation effect arises because employees expect team members who have selected a social-mission job that pays below market to be more value-congruent and, therefore, more cooperative than those who have selected a social-mission job that pays higher wages. Collectively, we demonstrate that in social-mission organizations, offering below-market pay can yield selection benefits. [ABSTRACT FROM AUTHOR]

By using weekly records on efficiency for four production lines in a Finnish food-processing plant during the period 1999-2005, the authors investigate the effects on production line performance once changes in Human Resource Management (HRM) practices were instituted. Using time-series methods to estimate structural change models, the authors were able to determine the extent to which specific HR policies--the introduction of teams, company-wide profit-sharing, and a group system of performance-related pay (PRP)--affected workers' efficiency, even though production technology remained the same. As predicted, the authors found that in three of the four production lines, when PRP was added to teams, productivity increased from between 9 and 20%, highlighting the importance of the complementarity between employee participation and incentive pay. [ABSTRACT FROM AUTHOR]

We examine how worker productivity differs when compensation is based on quantity, creativity, or the product of both measures. In an experiment in which participants design “rebus puzzles,” we find that combining quantity and creativity measures in a creativity-weighted pay scheme results in creativity-weighted productivity scores that are significantly lower than those generated by participants with quantity incentives alone. Follow-up analysis indicates that relative to participants in the quantity-only condition, participants in the creativity-weighted condition produce approximately the same number of high-creativity puzzles, but produce significantly fewer puzzles overall. Thus, while participants rewarded for creativity-weighted output tend to restrict their production to high-creativity efforts, they are unable to translate this focus into a greater volume of high-creativity output. Implications address a possible explanation for firms' reluctance to incorporate creativity measures within multidimensional performance measurement systems, notwithstanding published suggestions to do so. [ABSTRACT FROM AUTHOR]

A discussion is presented of the article "Measuring and Motivating Quantity, Creativity, or Both," published elsewhere in this issue. The methodology of the research presented in the article, in which participants in a management simulation experiment self-evaluated their productivity in terms of quantity and quality after creating a series of puzzles is praised for originality. The inherent difficulties of productivity accounting which must allow for creativity are demonstrated. Typical productivity research that demonstrates how compensation determines what work gets done strikes most readers as blindingly obvious. The article's authors conceived a process that demonstrated how economic incentives can actually fail to achieve their desired result.

Using data for the years 1985-92 from a discontinued suggestion program at a manufacturing plant in the United States, this study examines the benefits and costs of suggestions under gainsharing. The implemented suggestions are found to have improved labor productivity and reduced grievances and disciplinary actions, but more robust evidence suggests that they also incurred transaction costs and implementation costs. The author speculates that substantial transaction and implementation costs may be a factor responsible for the typically modest outcomes and generally short longevity of employee involvement programs and high-performance work practices. [ABSTRACT FROM AUTHOR]

Much of the academic and policy literature on performance-related pay (PRP) focuses on its role as an incentive system. Its role as a means for renegotiating performance norms has been largely neglected. This study examines the introduction of performance-related pay, based mostly on appraisals by line managers, in Britain's public services during the 1990s. Previous research indicates that PRP failed to motivate many of the staff and that its operation was divisive. Nevertheless, other information suggests that productivity rose. This article seeks to resolve the paradox using contract theory to show that performance pay was the instrument of a major renegotiation of performance norms, and that this rather than motivation was the principal dynamic. Goal-setting and appraisal by line managers played a key role in this process. [ABSTRACT FROM AUTHOR]

The authors propose a model of gainsharing as an organizational learning system. Analyzing employee suggestions submitted over the first four years of a gainsharing plan at one plant, the authors found that although conventional explanations of how gainsharing works predicted changes in the volume of total suggestions, changes in their content were consistent with an organizational learning process. Suggestions indicating 'first-order learning' were initially high but declined over time as a percentage of total suggestions, and suggestions congruent with 'second-order learning' became a larger portion of the total suggestions over time. [ABSTRACT FROM AUTHOR]

Norwegian national policies strongly incentivize double-earner households and gender equality, but various gender gaps persist both at work and at home. In these seemingly contradictory situations, what are the mechanisms under which Norwegian households allocate their market and domestic labor? Drawing on both a large set of administrative data and a representative survey, this question is examined from two perspectives. First, we focus on the micro-economic processes and investigate if Norwegian households act according to economic rationality or if they still follow the gender norm "A man should earn more than his wife." Second, we focus on how Norway's contextual factors may influence the household experiences when a wife has better market productivity. We find that a wife with better market productivity, who is thereby facing the risk of outearning her husband, works more hours and earns more than her husband, while doing less chores—behavior consistent with economic rationality. Further analyses show that women's "higher" relative market productivity is mainly a consequence of having low-income husbands, and "higher" and "lower" market productivity women are surprisingly similar in other sociodemographic aspects. Norwegian redistribution policies, through progressive taxation and benefit transfers, seem to mitigate the income differences and promote gender neutrality in a sense that if couples wish to pursue an untraditional division, by preference or by necessity, they seem to be able to do so without being held back by the traditional gender expectations or being very poor. [ABSTRACT FROM AUTHOR]

The article examines the wage bargaining and unemployment persistence in Europe. The author has developed a class of models based on two essential assumptions. The first assumption is that the wage is the result of bargaining between firms and employed workers, and unemployment affects the wage only to the extent that it affects the prospects of employed workers and of firms. The second assumption is that duration effects imply that the labor market prospects of the unemployed may differ in systematic ways from those of employed workers, were they to become unemployed.

Organizational theorists have advanced models of individuals' determination of equitable payment for work. Current demands by minority and women's groups stress equitable treatment by formal organizations. This article reviews primary areas in which the concept of equitable treatment has centered, notes findings, and discusses significant theoretical/methodological issues. The relationship of the equity concept and behavioral models is discussed, and frameworks for future research are presented. [ABSTRACT FROM AUTHOR]

Swedish experience of changes of payment systems indicates that there is a strong link between payment-by-results and the way the work organization functions. In fact the efficiency-promoting effects of payments-by-results to a great extent is explained by positive indirect effects on work forms, production planning and control, supervision and the readiness at the shop floor level to counteract and neutralize production disturbances and variations. This paper takes account of material from a study by Dr. Jan Edgren of changes in the payment system on the development, of events at a Grnges die-casting shop. It is pointed out that the indirect effects of payment systems make payment-by-results a strategic factor or leading system in the development of the shop floor organization and work forms. The paper also presents an outline of some characteristics of the payment systems of the future. [ABSTRACT FROM AUTHOR]

This analysis examines whether union representation positively or negatively influences the effectiveness of employee participation programs and group-based incentives in improving firm performance. Examined at the - firm level, a model of the independent and interaction effects of participation, profit and gain sharing, and union representation is estimated against data on 841 manufacturing firms in Michigan in 1989. The evidence indicates that employee participation programs contributed substantially more to performance in unionized firms than in nonunion firms, whereas profit and gain sharing programs contributed substantially more to performance in nonunion firms than in unionized firms. [ABSTRACT FROM AUTHOR]

This study of wage bargaining in the aerospace industry focuses particularly on lump sum bonuses, one-time cash disbursements that generally accompany lower increases in the base wage than were formerly standard. Although such bonuses, which appeared in aerospace companies before they appeared in other large manufacturing industries, were viewed as a union concession, they persisted into the 1989 bargaining round despite a sharp upturn in the fortunes of the most prominent aerospace company. The author regards that fact, as well as the weakening of both inter- and intra-industry pattern bargaining, as support for the view that a significant shift in union wage determination occurred in the 1980s. He argues, however, based on interviews with managers, union officials, and workers, that consensus has not yet been achieved on the meaning of this shift. [ABSTRACT FROM AUTHOR]

This study analyzes the determinants of earnings of professionals employed by manufacturing firms, with particular focus on the effect of oligopolistic market power. Using data from the 1970 census Public Use Sample, the authors find that salaries of young professionals (age 22 to 40) are significantly higher in concentrated than competitive industries, even when adjustments are made for possible differences in employee quality. Among older professionals, however, concentration is not a significant determinant of earnings nor are several other factors that influence the earnings of young professionals. The authors compare these results to those of their study, in the October 1977 Review, of the earnings of consupervisory employees in concentrated industries. [ABSTRACT FROM AUTHOR]

This paper investigates gainsharing plans and identifies problems that may limit potential gains in productivity. It explains how contemporary gainsharing plans constitute social dilemmas and provide an opportunity for "free-riding" and thus lower productivity. It also presents theoretical and experimental findings that suggest hypotheses regarding the impact on productivity of a fairer distribution rule and worker participation in the development of such a rule. The paper then describes two experiments designed to test these hypotheses. The experimental data reported in this study indicate that fair distribution rules that are participatively developed can ameliorate the social dilemma inherent in gainsharing plans. The paper offers prescriptions for improving gainsharing plans and discusses other implications of our findings. [ABSTRACT FROM AUTHOR]

This study examines the behavioral consequences of "gainsharing" using a theoretical framework that includes elements of agency and organizational justice theory. We propose that when gainsharing is used as a collective form of incentive alignment, mutual monitoring among employees is a direct function of procedural and distributive fairness. The hypothesis was supported in a quasi-experimental field study of 221 employees working for two firms. The implications of the study for future extensions of agency theory to intraorganizational phenomena are discussed. [ABSTRACT FROM AUTHOR]

What will the consumer markets of the 1960s be like? The author indicates the changes which took place between 1935 and 1959, and shows how forces now at work will influence marketing patterns for some time to come. [ABSTRACT FROM AUTHOR]

The article presents a sales compensation model for a machine-tool company. The compensation model is offered as an alternative to traditional commission based wages. Details on the company's products, sales area, sales force knowledge demands and primary markets are provided. A primary reason for compensation change is the cyclical and inconsistent nature of the market for boring machines and internal grinders. The industry is marked by a small number of large companies, making sales effort not closely aligned with sales. Four salary levels are described which attempt to retain sales incentives while making the terms of compensation fair for all sales personnel.

The article presents an analysis of price discrimination and seeks to address its purpose and underlying factors. Doctors and lawyers are known to practice personal discrimination in that they charge different prices based on a person's income or personal condition. A pricing method based on earning power is noted; it involves commission-type rates paid to the seller, which depend on the productivity, popularity or circulation of a product. An example of this is newspaper cartoon authors, who are paid in proportion with the newspaper's market size. Bargaining power is described as a method by which buyers or sellers adjust their prices depending on the demand or supply for an item.

The article focuses on protectionism and common markets. It states that Dean William Inge wrote that protectionism was a policy of weak economies, while free trade was a policy of strong economies. It comments on how protective tariffs do not maintain wage levels and living standards of workers in the protected country and cites that the introduction of labor-saving technologies helps to increase labor productivity, lessen costs, and allow wages to increase. It states that inefficient industries are not suffering from competition of cheap foreign labor but rather by competition for labor within the industry's own country due to progressive reductions in labor-unit costs.

The article discusses aspects of U.S. collective bargaining practices in the 1950's. During the past decade, certain developments in wage bargaining have brought a substantial reduction in the incidence of strikes and in the number of decisions on negotiated general wage increases in the U.S. In 1957 record lows were set for the post World War II period for workers involved in stoppages, percent of total employed, and percent of working time affected by stoppages. Several trends emerged after this period including centralized decision-making, long-term wage contracts, and the elaboration and extension of pattern bargaining.

The article discusses problems associated with guaranteed annual wage plans. One problem associated with the plans is work scheduling to insure the best use of the labor force. Based on a given output schedule a company must decide on a certain size of a team. The foreman is responsible for making sure the individuals on the team are used effectively. These issues must be resolved within the framework of the over time restrictions and the basic annual guarantee. Experts say contractual arrangements which specify the price and quantity of production factors create a significant need for opportunity cost information.

The article discusses the wage structure variations in U.S. manufacturing industries. Variations in interindustry wage structure in manufacturing are closely related to changes in net value productivity. Changes in both absolute and percentage average hourly earnings for the period 1947 to 1966 can be explained by the past rate of profit, changes in net value productivity, original level of wages and extent of unionization. Average unemployment rate also play a role in percentage wage changes.

In this era of widespread collective bargaining, do wages behave differently than in earlier periods when labor markets may have been more competitively structured? The auu thor of this article finds that even in the preNew Deal period, 1890-1932, no more than half of the year-to-year movement of wages in manufacturing industries can be accounted for by changes in the state of the labor market. While the magnitude of wage response to given levels of labor demand (or supply) generally has been greater in the post-World War II period, the analysis shows that, except for depression years, the first decade and a half of the twentieth century experienced wage increases similar to current movements. [ABSTRACT FROM AUTHOR]

Since 1947 a joint union-management job-evaluation program has governed occupational wage relationships in nearly all of the basic steel industry. It is widely believed that this program only formalized and refined underlying tendencies toward stability in skill differentials in this industry. This article presents contrary evidence to show that, prior to the introduction of the program, occupational earnings differentials in steel followed the general trend toward narrowing of the skilled-unskilled spread, and that relative stability in base-rate differentials has existed only since 1947. The relationship of the job-evaluation program to other factors contributing to this change in the direction of steel wage movements is also discussed. [ABSTRACT FROM AUTHOR]

The article deliberates on the relationship between productivity and wages. It's a complicated subject and deserves more attention from the economists and students of industrial relations. With all due credit to the author for the service rendered in bringing greater attention to the problem, several of his conclusions, assumptions, and observations seem to merit critical comment and analysis. The authors first major point is that comparisons should not be made between changes in average hourly earnings and productivity because many fringe items commonly included as labor costs, for accounting purposes, are not reflected in the average hourly earnings figures. The author argues that the comparison should be made between total labor costs and productivity, because total labor costs are absolutely more, and increase relatively faster, than basic wages or average hourly earnings. Obviously, the effects of the proposal would be to give the company more and the workers less of current income under any agreement tying wages to productivity. Although the proposed inclusion of all fringes as part of wages for this purpose may seem reasonable enough on its face, it is not so reasonable when the economic effects are considered.

In highly competitive markets, multiemployer bargaining may be a weak instrument for achieving price and wage stability, especially where a substantial portion of the industry's output is produced under nonunion conditions. Under such conditions, uniformity of wages and other conditions may even aggravate the instability by encouraging nonunion firms to expand output further. As described by the author, these generalizations find some support in the history of one attempt to stabilize output and wages in bituminous coal. [ABSTRACT FROM AUTHOR]

The presented paper first discusses possible hypotheses on the relationship between compensation and labor productivity, arguing equiproportionality between the two cannot be considered a viable economic hypothesis. The main part of the analysis focuses on the EU countries, presenting a detailed view of the developments in the past twenty years from the point of view of both nominal and real unit labor costs. It shows that the relationship between compensation and labor productivity varies greatly among the economies and no general conclusions may be drawn. In case of the Czech Republic the estimates show that responsiveness of compensation to productivity is relatively high as compared with the EU panel and the growth of compensation surpasses the growth of productivity in both nominal and real terms as compared with the EU or Germany as a benchmark. [ABSTRACT FROM AUTHOR]

▀ The current ‘low’ rate of unemployment looks less impressive when compared with the 2–3% rates averaged in the 1950s and 1960s. But both then and now share a common driver of low joblessness – pay growth falling unusually short of productivity gains. While the chances of this continuing look stretching, a return to genuine full employment is not completely implausible. ▀ Why was unemployment so low in the early post‐war period? Given the current uncertainty over how far joblessness can sustainably drop and how this affects monetary policy, our analysis provides useful insights for the situation today. ▀ Several explanations have been mooted. A political commitment to full employment is one, although aspiration alone cannot provide a cause. And demand management using fiscal policy is hard to square with the period's modest budget deficits. Meanwhile, booming post‐war investment and trade and shortages of labour fail to explain why low joblessness did not quickly trigger rapid rises in pay and inflation. ▀ The cause of very low unemployment appears to have sat with wage restraint relative to productivity gains. Unlike most of the last 70 years, real pay growth consistently fell short of productivity rises in the 1950s and part of the 1960s, cutting the cost of workers and ensuring a low ‘equilibrium’ rate of unemployment. ▀ This explanation has parallels with the present day. Since 2010, productivity growth has outstripped real pay rises to an extent not seen since the 1950s. We do not expect this pattern to continue – our forecasts show real pay running slightly ahead of productivity growth over the next five years. But if the factors holding back pay were to persist, alongside a catch‐up in UK productivity, a return to a 1950s/60s‐style jobless rate is possible, if the MPC did not take fright at further declines in unemployment. [ABSTRACT FROM AUTHOR]

Abstract: Wages in Australia have lagged behind the growth in labour productivity in recent years. This has been associated with a significant change in the distribution of income in favour of high‐income earners. Although a number of factors appear to have been involved in this development, an important explanation is also to be found in the change in the balance of power in favour of employers and against workers and unions. As changes in industrial relations laws have contributed substantially to this imbalance, a return to the earlier laws may be necessary to restore the institutional mechanism for wages growth. [ABSTRACT FROM AUTHOR]

This paper reconsiders the anteriority of Robert Torrens’s theory of natural wage to that of David Ricardo. Ricardo was influenced by Torrens’s thinking when writing the chapter on “Wages” of the Principles. For many historians of economic thought, this influence is limited to Torrens’s focus on the socio-cultural aspect of necessity goods, which determine the natural price of labor. While this interpretation is consistent with that of Ricardo, we argue that the anteriority of Torrens to Ricardo more generally focuses on the method used by the latter to justify the indexation of money wages on the money price of subsistence goods. Finally, this paper shows that the tribute paid to Torrens by Ricardo paradoxically explains posterity’s misunderstanding of his theory. [ABSTRACT FROM AUTHOR]

ABSTRACT State-owned firms were said to have an excessive use of labour. The cost of job losses after privatization was debated but ignored due to perceived efficiency gains in the utilization of labour. We estimate longer time employment risk, labour use adjustment and the efficiency of labour utilization in the Pakistani cement industry. We conclude that firms have made significant adjustments in labour use and employment risks have indeed reduced. Our estimates however, show that long run labour use efficiency in the industry and in the privatized firms has not improved, but that, surprisingly, firms set-up and operated privately have experienced a decrease in labour efficiency. [ABSTRACT FROM AUTHOR]