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Industrial Composition, Methods of Compensation and Real Earnings in the Great Depression

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  • Robert A. Hart
  • J. Elizabeth Roberts

Abstract

A major objective of the government during the Great Recession has been severely to restrict public sector real wage growth. One potential advantage of performance-related pay schemes is that they naturally offer greater wage responsiveness to fluctuations in the business cycle. Based on evidence from engineering and allied industries during the Great Depression we show that piecework wages exhibited more flexibility than their timework equivalents. We compare and contrast southern/midland engineering districts of Britain with northern districts. The former region was dominated by piece-rated workers and by modern sections of the industry, such as vehicle and aircraft manufacture. Time-rated work predominated in northern districts where older sections – for example, marine and textile engineering – were clustered‥

Suggested Citation

  • Robert A. Hart & J. Elizabeth Roberts, 2013. "Industrial Composition, Methods of Compensation and Real Earnings in the Great Depression," National Institute Economic Review, National Institute of Economic and Social Research, vol. 226(1), pages 17-29, November.
    • Handle: RePEc:sae:niesru:v:226:y:2013:i:1:p:r17-r29
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    References listed on IDEAS

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    1. Charles Brown, 1990. "Firms' Choice of Method of Pay," ILR Review, Cornell University, ILR School, vol. 43(3), pages 165-1-182-, April.
    2. Christopher A. Pissarides, 2009. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," Econometrica, Econometric Society, vol. 77(5), pages 1339-1369, September.
    3. Robert A. Hart & J. Elizabeth Roberts, 2013. "Real wage cyclicality and the Great Depression: evidence from British engineering and metal working firms," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 197-218, April.
    4. Susan Helper & Morris M. Kleiner & Yingchun Wang, 2010. "Analyzing Compensation Methods in Manufacturing: Piece Rates, Time Rates, or Gain-Sharing?," NBER Working Papers 16540, National Bureau of Economic Research, Inc.
    5. Seiler, Eric, 1984. "Piece Rate vs. Time Rate: The Effect of Incentives on Earnings," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 363-376, August.
    6. Hart, Robert A., 2008. "Piece work pay and hourly pay over the cycle," Labour Economics, Elsevier, vol. 15(5), pages 1006-1022, October.
    7. Eric Wigham, 1973. "The Power to Manage," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01264-0, October.
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    Cited by:

    1. Grace Weishi Gu & Eswar Prasad & Thomas Moehrle, 2020. "New Evidence on Cyclical Variation in Average Labor Costs in the United States," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 966-979, December.
    2. Grace Weishi Gu & Eswar Prasad, 2018. "New Evidence on Cyclical Variation in Labor Costs in the U.S," NBER Working Papers 24266, National Bureau of Economic Research, Inc.
    3. Paula Garda & Volker Ziemann, 2014. "Economic Policies and Microeconomic Stability: A Literature Review and Some Empirics," OECD Economics Department Working Papers 1115, OECD Publishing.
    4. Hart, Robert A & Roberts, J Elizabeth, 2013. "The rise and fall of piecework-timework wage differentials: market volatility, labor heterogeneity, and output pricing," Stirling Economics Discussion Papers 2013-12, University of Stirling, Division of Economics.

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    More about this item

    Keywords

    industrial composition; piecework; timework; real earnings; the Great Depression;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • N64 - Economic History - - Manufacturing and Construction - - - Europe: 1913-

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