Social scientists have long studied the effects of individual payment systems (including group and individual piece-rates, group and individual target rates, time, production bonuses, salary, commission) on worker's behavior (their output, interactions with other workers). Relatively neglected in this literature, however, are the topics of this research -- the determinants of payment systems at the level of establishments and occupations within establishments and the effects of payment systems on wage levels themselves. Of particular interest will be the adoption of 'incentive' pay schemes, including piece rates and bonuses versus the use of straight pay for time. In addition, comparisons of group and individual incentive systems are planned, as are tests of several functions of incentive pay systems -- their productivity effects, risk-sharing effects and their ability to sort high from low-productivity workers. The data to be analyzed comes from underutilized Industry Wage Surveys to be purchased from the Bureau of Labor Statistics and cleaned by the PI. The data will cover 18 selected manufacturing industries and are unusually rich in their coverage of establishment characteristics, in the quality of the data on wages and in their detailed occupational codes. Moreover, information on production workers within establishments will permit a rare separation of intra- versus inter-establishment processes. The PI is a highly regarded young scholar with unusual mathematical and statistical skills supported by a promising track record of publications in both the substantive area of this research and in the quantitative statistical methods used in this area.
