Does Group-Based Incentive Pay Lead To Higher Productivity? Evidence from a Complex and Interdependent Industrial Production Process
Group-based incentive pay is attractive in contexts where production is complex and interdependent, yet freeriding is a paramount concern. We assess the introduction of group-based performance pay in a modern industrial production setting using difference-in-difference estimation. Performance increased by 19 percent, with three quarters coming from increased performance of existing workers and the remaining from selection; workers became more efficient and were absent less often. We find little evidence of freeriding; quantile regressions show increased performance throughout the distribution of workers. Features of the design and implementation process created trust, a common goal, and a shared identity, which limited freeriding.
Year of publication: |
2022
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Authors: | Frederiksen, Anders ; Hansen, Daniel Baltzer Schjødt ; Flaherty Manchester, Colleen |
Publisher: |
Bonn : Institute of Labor Economics (IZA) |
Subject: | difference-in-differences | performance pay | group-based incentive | freeriding | incentive effects | selection effects | absenteeism | efficiency | performance | productivity | trust |
Saved in:
freely available
Series: | IZA Discussion Papers ; 14986 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 1787786137 [GVK] hdl:10419/250647 [Handle] RePEc:iza:izadps:dp14986 [RePEc] |
Classification: | M5 - Personnel Economics ; J33 - Compensation Packages; Payment Methods ; L23 - Organization of Production |
Source: |
Persistent link: https://www.econbiz.de/10012882562