PIECE-RATES, PRINCIPAL-AGENT MODELS, AND PRODUCTIVITY PROFILES - PARAMETRIC AND SEMIPARAMETRIC EVIDENCE FROM PAYROLL RECORDS

This paper uses data on the wages received by piece-rate workers to es timate worker productivity profiles. The data were collected from the payroll records of a British Columbia copper mine. The advantage of th ese data is the close link between observed wages and worker productiv ity. An explicit model is used to control for worker effort as a funct ion of observable worker characteristics and the parameters of the com pensation system. The model implies a censored wage distribution, the parameters of which can be estimated using well-known econometric tech niques. Semi-parametric estimation allows for the relaxation of the di stributional assumptions of the model. Results suggest that while prod uctivity profiles were increasing concave functions of tenure, they we re also very flat. I relate these results to historical arguments on t he skill-saving nature of technological change in the mining industry at the end of the nineteenth century.