Is Seniority-Based Pay Used as a Motivation Device? Evidence from Plant Level Data

34 Pages Posted: 27 Oct 2004

See all articles by José Alberto Bayo Moriones

José Alberto Bayo Moriones

Public University of Navarre - Department of Business Administration

Jose E. Galdon-Sanchez

Universidad Publica de Navarra ; IZA

Maia Güell

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2004

Abstract

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.

Keywords: Human resource management practices, incentives, monitoring

JEL Classification: J30, M12, M52

Suggested Citation

Bayo Moriones, José Alberto and Galdon-Sanchez, Jose E. and Guell, Maia, Is Seniority-Based Pay Used as a Motivation Device? Evidence from Plant Level Data (September 2004). CEPR Discussion Paper No. 4606. Available at SSRN: https://ssrn.com/abstract=610904

José Alberto Bayo Moriones

Public University of Navarre - Department of Business Administration ( email )

Campus de Arrosadia
31006 Pamplona
Spain
34 948 169 377 (Phone)
34 948 169 404 (Fax)

Jose E. Galdon-Sanchez

Universidad Publica de Navarra ( email )

Department of Economics
Campus de Arrosadia
Pamplona, Navarra 31006
Spain
+34 948 16 9338 (Phone)
+34 948 16 97 21 (Fax)

HOME PAGE: http://www.econ.unavarra.es/~galdon/

IZA

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

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=1494

Maia Guell (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 2717 (Phone)
+34 94 816 9721 (Fax)

HOME PAGE: http://www.econ.upf.es/~mguell/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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