DOES SALARIED STATUS AFFECT HUMAN-CAPITAL ACCUMULATION

Human capital studies do not usually consider whether an individual is paid an hourly wage or a salary. The authors of this paper develop a conceptual framework that explains why some workers are paid salaries and predicts that salaried workers will invest more in human capital t han will hourly workers. In particular, this prediction hinges on the differing effort incentives facing hourly and salaried workers, and th eir employers, in jobs that are paced versus unpaced. Empirical eviden ce supporting this prediction and other hypotheses implied by the prop osed framework is presented using data on individuals covering a 16-mo nth period in 1984-85 from the Bureau of Census Survey of Income and P rogram Participation (SIPP), a longitudinal survey.