Piece rates and workplace injury: Does survey evidence support Adam Smith?
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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.
KeywordsPiece rate Injury Incentives
JEL ClassificationJ33 J28
The authors are grateful to the editor Erdal Tekin and two anonymous referees for comments on the paper. We would also like to thank participants at the 2010 Scottish Economic Society Conference, the SIRE Workshop on Workplaces and Wellbeing at the University of Dundee, the 2010 Joint Meeting of EALE and SOLE at UCL, the 2010 ESPE meetings in Essen and seminars at the economics departments at Sheffield University, Lingnan University and Northern Illinois University.
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