incentives, piece rate, productivity, sports

Do Salaried Workers Perform Better Than Piece Rate Workers?

Empirical evidence links switches to performance-related pay with improved worker performance. But pure piece rate working is uncommon. The majority of workers are salaried. We exploit a natural experiment in which some workers in a particular occupation (football referees) switch from pure piece rate to salaried annual contracts. We use this to establish the effects on worker performance. Worker performance improves among those who move onto salaried contracts relative to those who do not.