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Non-monetary%20rewards%20

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Workers vary in their preference for non-monetary or non-pecuniary factors. E.g. teachers ... Pecuniary effects. Higher wages deter turnover. ... – PowerPoint PPT presentation

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Title: Non-monetary%20rewards%20


1
Non-monetary rewards compensating differentials
  • 1. What are non-monetary non-wage rewards?
  • MNCs
  • Other jobs
  • 2. Theory (Compensating differentials)
  • 3. Empirical evidence
  • Executive pay
  • Teachers

2
1. Non-monetary non-wage rewards
  • Components of compensation in International
    Business (MNCs) senior managers
  • Base salary performance component
  • Foreign service inducement
  • Allowances housing, education, travel, security
  • Benefits insurance pensions see Lazear
  • Total remuneration
  • Note Local circumstances

3
Local Issues
  • Legal constraints
  • Mandated benefits Rewards limitations
  • Tax law Labor relations law
  • Social custom
  • Role of family employer
  • Role of government
  • Economic differences

4
1. Non-monetary non-wage rewards
  • Components of non-monetary compensation for lower
    level jobs
  • Flexibility of hours
  • Security risk of injury
  • Conditions of work
  • Training
  • Preferences tastes are heterogenous

5
2. Theory
  • Two types of worker
  • Worker A strong preference for flexible hours
  • Worker B weak preference for flexible hours
  • More generally
  • Workers vary in their preference for non-monetary
    or non-pecuniary factors
  • E.g. teachers
  • E.g. nurses

6
2. Theory
Wage
Indifference curves worker A
Flexible hours
7
2. Theory
Wage
Indifference curves worker B
Flexible hours
8
2. Theory
Worker A
Wage
(Pecuniary)
Worker B
C
Wc
S
WS
Y
X
Z
TC
TS
Flexible hours
(Non-pecuniary)
9
2. Theory
Worker A
Wage
(Pecuniary)
Worker B
C
Wc
S
WS
Y
X
Z
TC
TS
Flexible hours
(Non-pecuniary)
10
3. Empirical evidence School teachers
  • For current teachers there are 2 key issues in
    teacher labour supply
  • (a) Retention of teachers
  • (b) Distribution of teacher quality across
    school systems
  • Why do teachers exit teaching?
  • Policy debate the relative role of pecuniary and
    non-pecuniary factors
  • Shape the appropriate policy response

11
Pecuniary and Non-Pecuniary Factors
  • Previous literature
  • Pecuniary
  • Relative wage in other professions (Murnane and
    Olsen, 1989 Dolton and Van der Klaauw,
    1995,1999)
  • Non-Pecuniary
  • Maternity (Stinebrickner, 2002)
  • Class size and workload (Mont Rees, 1996)

12
Data Source
  • Use MOHRI (Minimum Obligatory Human Resource
    Information) for the Australian state of
    Queensland.
  • Covers whole population of state school teachers
    (31,000)
  • Quarterly individual level data for 2001 and 2002
  • Detailed human resource information
  • Pay, allowances, contract type
  • School information (school size, class size,
    performance)
  • Personal characteristics (gender, ethnicity,
    disability, education, subject specialisation)

13
Permanent Teaching Labour Force - Summary
  • Males Females
  • Stayed Moved Exited Stayed Moved
    Exited
  • Pecuniary
  • Predicted Wage (log) 3.024 2.981 2.987
    2.769 2.768 2.750
  • Own wage (log) 3.320 3.291 3.282
    3.255 3.240 3.229
  • Locality Allowance 0.267 0.475 0.188
    0.213 0.285 0.086
  • Non-pecuniary
  • School size (log) 6.237 5.941 6.270
    6.171 5.991 6.208
  • Average Class size (log) 2.200 2.215
    2.155 2.321 2.307 2.288
  • High student Perform 0.283 0.230 0.251
    0.285 0.249 0.276
  • Low student Perform 0.201 0.275 0.267
    0.196 0.249 0.211
  • Remote 0.062 0.143 0.065 0.072
    0.110 0.081
  • Rural 0.146 0.191 0.149 0.147
    0.181 0.159
  • Part-time 0.054
    0.149 0.253 0.204 0.289 0.376
  • Tenure yrs 16.091 10.716 10.670 11.765
    8.906 8.300
  • Observations 7,566 411
    1,176 19,114 978 3,269

14
Selected Estimates MNL Logit, Marginal Effects
  • Males Females
  • (p-val) Turnover Mobility Turnover
    Mobility_
  • Pecuniary
  • Predicted Wage 0.021 (0.03) -0.025 (0.13)
    -0.003 (0.80) -0.088 (0.00)
  • Own Wage -0.077 (0.00) -0.064 (0.01)
    -0.052 (0.00) -0.044 (0.01)
  • Locality Allowance -0.008 (0.08) 0.009
    (0.03) -0.041 (0.00) 0.016 (0.00)
  • Non-Pecuniary
  • Primary -0.018 (0.03) 0.006 (0.62) -0.011
    (0.01) 0.003 (0.70)
  • School Size 0.007 (0.13) -0.049 (0.00)
    0.003 (0.22) -0.033 (0.00)
  • Average Class Size -0.008 (0.11) 0.049
    (0.00) -0.003 (0.22) 0.031 (0.00)
  • High Student Perform -0.003 (0.57) -0.010
    (0.25) 0.000 (0.98) -0.006 (0.29)
  • Low Student Perform 0.014 (0.00) 0.015
    (0.08) 0.003 (0.28) 0.024 (0.00)
  • Part-time 0.061(0.00) 0.121(0.00) 0.027
    (0.00) 0.053 (0.00)
  • Remote School 0.009 (0.32) 0.053 (0.00) 0.023
    (0.00) 0.029 (0.00)
  • Rural School 0.005 (0.41) 0.012 (0.21)
    0.015 (0.00) 0.012 (0.06)

Additional Controls Primary, Part-time,
Ethnicity, Disability, Subject specialisation,
Education Quals, Female staff, degree staff,
Number private schools in district, local
unemployment rate.
15
Summary of evidence
  • Pecuniary effects
  • Higher wages deter turnover.
  • Locality allowances deter turnover and encourage
    mobility especially for female teachers
  • Locality allowances retain male teachers in
    rural/remote locations
  • Non-pecuniary effects
  • Primary schools have lower turnover
  • Difficulty keeping less experienced female
    teachers in rural/remote schools.
  • Mobility away from small schools/larger classes
  • Conclusion
  • Pecuniary and non-pecuniary influences on
    turnover and mobility.
  • Locality allowances - encouraged some movement to
    and reduced mobility away from rural/remote
    schools
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