Work quality and optimal pay structure: Piece vs. hourly rates in employee remuneration

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Abstract

This paper constructs a model investigating the impact of pay structure on the quantity and quality of work and its welfare implications. We prove that a change in pay structure alone could increase the utility of employers given the employees' utility level, and hence, by appropriate income distribution, could increase social welfare.

Original languageEnglish
Pages (from-to)409-416
Number of pages8
JournalEconomics Letters
Volume47
Issue number3-4
DOIs
Publication statusPublished - Mar 1995

Keywords

  • Employee remuneration
  • Optimal pay structure
  • Work quality

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