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Implementing performance pay requires that workers' output be measured. When measurement costs differ among firms, those with a measurement cost advantage choose to implement performance pay. They attract the best workers, and both the level and variability of compensation are higher at these...
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to contracting firms. For this end we develop a new method for identifying outsourcing of food, cleaning, security and … growth of domestic outsourcing in Germany since the early 1990s. Event-study analyses show that wages in outsourced jobs fall … associated with outsourcing stem from a loss of firm-specific rents, suggesting that labor cost savings are an important reason …
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