Working Paper: CEPR ID: DP4606
Authors: Alberto Bayomoriones; Jos Enrique Galdn Sánchez; Maia Gell
Abstract: In this Paper we use data from industrial plants to investigate if seniority-based pay is used as a motivational device for production workers. Alternatively, seniority-based pay could simply be a wage-setting rule not necessarily related to the provision of incentives. Unlike previous papers, we use a direct measure of seniority-based pay as well as measures of monitoring devices and piece-rates. We find that firms that offer seniority-based pay are less likely to offer explicit incentives. They are also less likely to invest in monitoring devices. We also find that firms that offer seniority-based pay are more likely to engage in other human resource management policies that result in long employment relationships. Overall these results suggest that seniority-based pay is indeed used as a motivation device.
Keywords: human resource management practices; incentives; monitoring
JEL Codes: J30; M12; M52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Less likely to provide explicit incentives (D86) | Less likely to invest in monitoring devices (G31) |
| Seniority-based pay (J33) | Less likely to provide explicit incentives (D86) |
| Seniority-based pay (J33) | Less likely to invest in monitoring devices (G31) |
| Seniority-based pay (J33) | Engaging in other personnel practices promoting long-term employment (M51) |