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Compensation Policy and Worker Performance: Identifying Incentive Effects from Field Experiments

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  • Bruce Shearer

Abstract

The role of field experiments in evaluating the effect of compensation policies on worker productivity is considered. Particular attention is paid to the ability of a field experiment to identify the effect of a permanent change in firm policy. While field experiments solve endogeneity problems through randomization, they do so within a specific, and at times artificial, environment that may not be replicated by a permanent policy change. As such, rather than providing a basis for the unrestricted identification of incentive effects, experiments are better thought of as providing exogenous variation with which to identify structural parameters. These parameters can, in turn, be used to predict the effects of policy changes.

Suggested Citation

  • Bruce Shearer, 2003. "Compensation Policy and Worker Performance: Identifying Incentive Effects from Field Experiments," Cahiers de recherche 0326, CIRPEE.
    • Handle: RePEc:lvl:lacicr:0326
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2003/CIRPEE03-26.pdf
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    Cited by:

    1. Qiao Wang, 2023. "Does the Chinese labour force make sufficient efforts? Empirical evidence using non‐parametric analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3262-3280, July.
    2. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2013. "Do Wage Cuts Damage Work Morale? Evidence From A Natural Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 853-870, August.

    More about this item

    Keywords

    Econometrics of contracts; Incentives; Experiments;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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