Using data from the National Longitudinal Survey of Youth (1988-90), the author investigates the relationship between methods of pay, including piece rates and bonuses, and the level and variance of wages. Among men, piece rate workers earned a premium compared to other workers, but the evidence...

This paper analyzes the evolution of the labour market participation rate of men and women age 15 to 24 from 1976 to 1998. The main question being asked is why youth participation rates fell precipitously during the 1990s? We look at two dimensions of this decline: changes in the fraction of...

We develop a model in which a worker’s skills determine the worker’s current wage and sector. The market and the worker are initially uncertain about some of the worker’s skills. Endogenous wage changes and sector mobility occur as labor market participants learn about these...

Using data from the National Longitudinal Survey of Youth (1988–90), the author investigates the relationship between methods of pay, including piece rates and bonuses, and the level and variance of wages. Among men, piece rate workers earned a premium compared to other workers, but the...

With data from the Panel Study of Income Dynamics I show that individuals in performance pay jobs were much less likely to be unemployed at the time of the interview than those in “fixed” wage jobs during the 2008 recession. While their unemployment rate is always lower in non-recession...

We begin with two uncontroversial hypotheses - firm productivity is expensive to measure and employment entails relationship-specific investments. These assumptions imply that firms would optimally choose fixed-wage contracts, and complement these with bonus pay when measuring employee...