Self-employment, pay systems, and the theory of the firm: An empirical analysis

The literature on incentives and organizations implies that the costs of monitoring determine the type of pay system utilized. This paper considers self-employment, salary pay, and hourly pay as three distinct pay systems. Using job characteristics from the Dictionary of Occupational Titles merged t...

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Bibliographic Details
Published in:Journal of economic behavior & organization 1998-08, Vol.36 (2), p.257-274
Main Author: Garen, John
Format: Article
Language:English
Subjects:
Data analysis
Economic incentives
Economic theory
Empirical research
Employment
Firm organization
Firm theory
Job descriptions
Labour market
Pay systems
Payment systems
Self employment
Self-employed workers
Statistical analysis
Studies
Wage & salary administration
Wage rates
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Summary:The literature on incentives and organizations implies that the costs of monitoring determine the type of pay system utilized. This paper considers self-employment, salary pay, and hourly pay as three distinct pay systems. Using job characteristics from the Dictionary of Occupational Titles merged to Current Population Survey data, I determine which types of jobs each pay system occurs in. Strong support is found for the monitoring cost explanation.
ISSN:0167-2681
1879-1751
DOI:10.1016/S0167-2681(98)00065-1