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Yui Nakamura
''An incentive to increase laborers' productivity with adopting performance-based wages and paid vacations''
( 2011, Vol. 31 No.1 )
This paper shows that introducing a paid-vacation system tied to performance is effective in increasing the motivation of laborers to make effort and exercise high productivity. This effect is similar to the effects of implementing a performance-based wage system, on which many earlier papers have focused. We also found that the paid-vacation system can be particularly effective in companies where high-skilled laborers are required and labor hours are long. In addition, laborers' motivation can be greater when a company offers different performance-based compensation schemes, such as the performance-based system and the paid-vacation system, because each laborer has heterogeneous preference for leisure.
Keywords: paid vacation, performance-based wage, incentive, effort
JEL: D6 - Welfare Economics: General
J3 - Wages, Compensation, and Labor Costs: General
Manuscript Received : Mar 16 2010 Manuscript Accepted : Mar 30 2011

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