Article ID Journal Published Year Pages File Type
970447 The Journal of Socio-Economics 2010 9 Pages PDF
Abstract

I model and empirically test the hypothesis that higher-quality workers prefer performance pay to time-rate based pay because they realize rent upon two different dimensions: Explicit and implicit rents. First, higher-quality workers are outright more productive than their lower-quality counterparts, earning them explicit rent (Curme and Stefanec, 2007). Second, these same factors of production facilitate the unobserved heterogeneity for incentive workers, earning them implicit rent because they can produce a given level of output with less effort. I find strong empirical evidence to confirm that these implicit rents exist and I measure them at 1.5–3.4 percent of average real hourly earnings.

Keywords
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
,