Job Characteristics and the Form of Compensation

USC Law School, Olin Working Paper No. 99-10

73 Pages Posted: 16 Jun 1999

See all articles by W. Bentley MacLeod

W. Bentley MacLeod

Columbia University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Daniel Parent

McGill University - Department of Economics

Date Written: May 1999

Abstract

In this paper we introduce a way to systematically organize the choice between different forms of compensation based upon observable job characteristics. Secondly, we explore the determinants of compensation based upon questionnaire responses concerning job characteristics and methods of pay contained in the Quality of Employment Survey (QES), the National Longitudinal Survey of Youth (NLSY), the Panel Study of Income Dynamics (PSID), and the Current Population Survey. The main conclusion is that there is no single model of the employment relationship that can explain the variation in compensation form. We draw upon both agency and incomplete contract models to study the interplay between job characteristics and compensation. Specific results include a) the number of tasks seems to be associated with the use of incomplete contracts; b) jobs with high power incentives (piece or commission rates) tend to be associated with more worker autonomy and fewer tasks performed than hourly paid or salary jobs; c) tight labor market conditions tend to be associated with increased use of bonuses and promotions.

Suggested Citation

MacLeod, William Bentley and Parent, Daniel, Job Characteristics and the Form of Compensation (May 1999). USC Law School, Olin Working Paper No. 99-10. Available at SSRN: https://ssrn.com/abstract=167570 or http://dx.doi.org/10.2139/ssrn.167570

William Bentley MacLeod (Contact Author)

Columbia University - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Daniel Parent

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
Canada
514-398-4846 (Phone)
514-398-4938 (Fax)

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