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

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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.

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en

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application/pdf

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http://eprints.lse.ac.uk/19944/1/Is_Seniority-Based_Pay_Used_as_a_Motivation_Device_Evidence_from_Plant_Level_Data.pdf

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