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Part $1$

According to a$$ study, the number of jobs in which firms used$$ bonuses, commissions, or piece rates to tie$$ workers' pay to their performance increased from an estimated $30$ percent of all jobs in the $1970$s to $40$ percent in the $1990$s$.$

$$Source: Thomas$$ Lemieux, W$.$ Bentley$$ MacLeod, and Daniel$$ Parent, "Performance Pay and Wage$$ Inequality," Quarterly Journal of

Economics$,$

Vol.$124,$ No$.1,$ February$2009,$ pp$.1-49.$

Why would systems that tie worker pay to how much they produce have become increasingly popular with$$ firms?

Part $2$

Systems that tie worker pay to how much they produce have become increasingly popular because such systems

Part $3$

A$.$

provide incentives for workers to produce more output.

B$.$

attract and retain the most productive workers.

C$.$

generate more risk for employers.

D$.$

are less likely to result in cognitive dissonance among workers.

E$.$

both a and b$.$

Your answer is correct.

Part $4$

The same study found that these pay systems were more common in$$ higher$-$paid jobs than in$$ lower$-$paid jobs. What explains this$$ result?

Part $5$

A$.$

It is

lessless

difficult in

lowlow$$er$-$paid

jobs to measure output.

B$.$

It is

moremore

difficult in

highhigh$$er$-$paid

jobs to attribute output to any particular worker.

C$.$

Workers in$$ higher$-$paid jobs are more averse to risk.

D$.$

Workers in$$ lower$-$paid jobs are more likely to become less concerned about quality.

E$.$

Both a and b$.$