Pay,Risk,and Productivity.The Case of Finland,1980 -1996

Abstract

This paper reports on four topics. To what extent are piece-rate systems used among manufacturing workers in Finland? What is the effect on the average pay level of using piece- versus time-rate systems? How much wage risk is associated with a piece-rate system? How much of the pay differential between pieceand time-rate workers is compensation for extra effort and how much is compensation for bearing additional risk? Have these relations changed over time? We have access to unique individual-level data on payment systems from several thousand establishments and more than a quarter of a million individuals in the Finnish private sector