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Flexible pay systems and labour productivity: Evidence from Emilia-Romagna manufacturing firms

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  • Davide Antonioli
  • Paolo Pini
  • Roberto Antonietti

Abstract

The aim of this paper is to analyse the link between flexible pay systems (FPS) and labour productivity, with a close look at wage premium determinants as elements disclosing specific managerial strategies. The analysis was conducted on a sample of more than 500 manufacturing firms located in the Emilia-Romagna region, Italy. Results show that the adoption of flexible pay schemes is linked to union involvement and organizational changes within the firm, supporting the idea that flexible wages do not constitute merely an economic premium, but a more complex strategy aimed at increasing employees' flexibility and autonomy. Notwithstanding the positive effects on productivity, the relation with economic performance does not emerge as extremely innovative. On the one hand, it is driven by a traditional form of premiums (PRP) targeted to individual employees and linked to a simple "effort improvement and control" motivation and "ability to pay" of the firm. On the other, it is driven by premiums (PFP) provided ex-ante and aimed at developing employees' participation and competencies.

Suggested Citation

  • Davide Antonioli & Paolo Pini & Roberto Antonietti, 2014. "Flexible pay systems and labour productivity: Evidence from Emilia-Romagna manufacturing firms," Working Papers 2014143, University of Ferrara, Department of Economics.
    • Handle: RePEc:udf:wpaper:2014143
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    2. Davide Antonioli & Paolo Pini, 2014. "Europe and Italy: Expansionary Austerity, Expansionary Precariousness and the Italian Jobs Act," Working Papers 2014153, University of Ferrara, Department of Economics.

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    More about this item

    Keywords

    performance related pay; pay for participation; organizational innovation; industrial relations; labour productivity;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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

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