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The Impact of Technological Change on Incentive Provision

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  • Maurizio Lisciandra

Abstract

The Impact of Technological Change on Incentive Provision - The simple trade-off between incentive and risk, which is crucial to the agency problem, is not a sufficient explanation for the ineffectiveness of a specific output-related pay such as the contract system adopted in the US iron and steel industry during the second half of the nineteenth-century. The high rate of technological innovation along with workers? extensive bargaining power made output-related pay a sub-optimal solution. This stylised fact unveils the conflicting nature of piece-rate pay compared to fixed pay as new technology is introduced and stimulates an analysis of the interaction between technological change, bargaining powers, and payment systems which can be conducive to a better understanding of the agency problem and the use of incentive pay. Key words: Incentive Contracts, Inside Contracting, Unions, Technological Change. JEL Classification: J33, J51, N31, O33

Suggested Citation

  • Maurizio Lisciandra, 2008. "The Impact of Technological Change on Incentive Provision," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2008(95), pages 5-36.
    • Handle: RePEc:fan:steste:v:html10.3280/ste2008-095001
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    Keywords

    incentive contracts; inside contracting; unions; technological change. jel classification: j33; j51; n31; o33;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • N31 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: Pre-1913
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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