Worker cooperation and the ratchet effect

H. Lorne Carmichael, W. Bentley MacLeod

Research output: Contribution to journalArticlepeer-review

37 Scopus citations

Abstract

Workers paid by the piece should be happy to introduce new techniques that increase output, but firms always seem to reduce the piece rate when workers start earning too much money. Workers respond by restricting output and keeping good new ideas to themselves. We show that this outcome is inevitable in a competitive environment. However, there are noncompetitive situations where firms can use piece rates to get cooperation from their workers. These predictions are consistent with case history evidence from the cotton spinning industry in England in the nineteenth century and the Lincoln Electric Company in the United States even today.

Original languageEnglish (US)
Pages (from-to)1-19
Number of pages19
JournalJournal of Labor Economics
Volume18
Issue number1
DOIs
StatePublished - Jan 2000

All Science Journal Classification (ASJC) codes

  • Industrial relations
  • Economics and Econometrics

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