In recent years economists have devoted considerable attention to the normative properties of alternative compensation arrangements. Among the arrangements discussed have been deferred payment schemes, efficiency wages, piece rates, and tournaments. The optimality properties of the various arrangements derives from the postulated incentive effects that each arrangement is thought to have. Yet, surprisingly there has been very little effort made to empirically test whether hypothesized incentive effects of compensation arrangements actually exist. The proposal consists of two broadly related, but independent projects that begin to remedy this deficiency. The first will involve an empirical test of tournament theory using data available from golf tournaments. Data for this project will be assembled from published sources. The second project will focus on the impact of sick leave policies on teacher absenteeism. This project will examine whether variations in sick leave policies across school districts affect teacher absentee rates, and whether this in turn influences academic performance of students. Much of the data will be independently collected in a survey of 700 school districts in New York.
