Working Paper: CEPR ID: DP1097
Authors: Alison L. Booth; Jeff Frank
Abstract: This paper uses the British Household Panel Survey to investigate when seniority is rewarded by automatic incremental scales. Scales are seen as an alternative to individual merit pay. They are likely to be used when individual productivity is hard to measure, when firms provide all workers with similar levels of training and when workers have sufficient bargaining power to gain insurance against mis-measurement in the allocation of merit pay. The data provide support for these hypotheses.
Keywords: seniority; merit pay; earnings; unions
JEL Codes: J31; J33; J41; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Union presence (J45) | Likelihood of being on seniority wage scale (J31) |
| Workplace size (J29) | Likelihood of being on seniority wage scale (J31) |
| Receipt of training (M53) | Likelihood of being on seniority wage scale (J31) |