The Consequences of a Piece Rate on Quantity and Quality: Evidence from a Field Experiment

36 Pages Posted: 19 Oct 2013

See all articles by John S. Heywood

John S. Heywood

University of Wisconsin at Milwaukee

Stanley Siebert

Business School, University of Birmingham; IZA Institute of Labor Economics; Institute of Economic Affairs (IEA)

Xiangdong Wei

Lingnan College

Abstract

This field experiment examines output quantity and quality for workers in a data input business. We observe two sets of workers that differ in monitoring intensity as they move from time to piece rates. The application of piece rates increases quantity, and we find that the resultant quality can be improved with sufficient monitoring. "Committed" workers also produce higher quantity and quality, showing the role of worker selection - which appears especially strong under time rates. Our results thus show how a firm can refine its worker selection and monitoring options together with the payment system to deliver its chosen quality-quantity combination.

Keywords: piece rate, monitoring, shirking, quantity and quality trade off, field experiment, worker committment

JEL Classification: D2, J3, L2, M5

Suggested Citation

Heywood, John S. and Siebert, Stanley and Wei, Xiangdong, The Consequences of a Piece Rate on Quantity and Quality: Evidence from a Field Experiment. IZA Discussion Paper No. 7660, Available at SSRN: https://ssrn.com/abstract=2342532 or http://dx.doi.org/10.2139/ssrn.2342532

John S. Heywood (Contact Author)

University of Wisconsin at Milwaukee ( email )

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Stanley Siebert

Business School, University of Birmingham ( email )

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IZA Institute of Labor Economics

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Institute of Economic Affairs (IEA) ( email )

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Xiangdong Wei

Lingnan College ( email )

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Hong Kong
China

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