Is seniority-based pay used as a motivation device? Evidence from plant level data

Bayo-Moriones, Alberto, Galdon-Sanchez, Jose E. and Guell, Maia (2004) Is seniority-based pay used as a motivation device? Evidence from plant level data. CEPDP (646). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753017768

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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.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2004 the authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor
JEL classification:	M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M12 - Personnel Management M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues) J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General
Date Deposited:	25 Jul 2008 08:42
Last Modified:	15 Sep 2023 22:57
URI:	http://eprints.lse.ac.uk/id/eprint/19944

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