The Determinants of Incentive Schemes: Australian Panel Data

Abstract

This paper estimates the determinants of individual incentive schemes contrasting cross-sectional estimates with panel estimates that account for establishment fixed effects. The panel estimates differ from previously established cross-sectional relationships. While the cross-sectional estimates reveal the traditional findings that the share of women workers (a proxy for short expected tenure) and the size of the establishment positively influence the adoption of individual incentive schemes, the panel shows no evidence for either association. Instead, the panel results suggest that such schemes substitute for both direct supervision and high or efficiency wage policies.