What is it about?
While piece rates are routinely associated with higher productivity and wages, they can also generate unanticipated effects. Using cross-country European data, we provide among the first general survey evidence of a strong link between piece rates and workplace injury. Despite controls for workplace hazards, job characteristics and worker effort, piece rates workers suffer a 5 percentage point greater likelihood of injury. This remains despite attempts to control for endogeneity and heterogeneity. As piece rate wage premium estimates rarely control for injury likelihood, this raises the specter that part of that premium reflects a compensating wage differential for risk of injury.
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Why is it important?
Firms may want to mitigate the effect of performance pay on injuries to increase productitvity.
Perspectives
This is the first paper to look at the performance pay - injury relationship using nationally representative data.
Professor Keith A Bender
University of Aberdeen
Read the Original
This page is a summary of: Piece rates and workplace injury: Does survey evidence support Adam Smith?, Journal of Population Economics, November 2011, Springer Science + Business Media,
DOI: 10.1007/s00148-011-0393-5.
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