Volume 31, Number 2 (Spring) 1996
Shearer, Bruce. 1996. "Piece-Rates, Principal-Agent Models, and Productivity Profiles: Parametric and Semi-Parametric Evidence from Payroll Records." Journal of Human Resources 31(2):275-303.
This paper uses data on the wages received by piece-rate workers to estimate worker productivity profiles. The data were collected from the payroll records of a British Columbia copper mine. The advantage of these data is the close link between observed wages and worker productivity. An explicit model is used to control for worker effort as a function of observable worker characteristics and the parameters of the compensation system. The model implies a censored wage distribution, the parameters of which can be estimated using well-known econometric techniques. Semi-parametric estimation allows for the relaxation of the distributional assumptions of the model. Results suggest that while productivity profiles were increasing concave functions of tenure, they were also very flat. I relate these results to historical arguments on the skill-saving nature of technological change in the mining industry at the end of the nineteenth century.
Bruce Shearer is a professor of economics at Laval University in Québec. He thanks Charles Beach, Lorne Carmichael, Christopher Ferrall, Harry Paarsch, and two anonymous referees for helpful comments. Takao Kato also provided useful discussion. Research support from the Centre for Resource Studies at Queen ‘s University is gratefully acknowledged. James Huzel kindly provided the personnel files from Britannia. The author would also like to thank the staff at the University of British Columbia Special Collections for their cooperation and Jennine Ball, Julie McCarthy, Brian Southam, Krista Clairmont, Beth Riley, and Lisa Wu for data entry. The author claims responsibility for all errors. , The data used in this article can be obtained beginning in November 1996 through October 1999 from the author: Department of Economics, Laval University Créfa and Cirano, Québec. Québec, Canada G1K 7P4.
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