Home based women workers in the country are usually identified as piece rate workers
involved in manufacturing and post manufacturing parts as embroidery, carpet weaving, hand-loom, bangle making, prawn peeling, making incense sticks, filling match boxes.
To investigate whether that pattern simply reflects the payment of compensating differentials for the increased risks faced by piece rate workers (Seiler 1984), for example, one needs to "purge" the total cross-sectional wage variance of the part that comes from unobserved worker heterogeneity - an exercise that requires the use of longitudinal data.
1) The main finding from these papers is that "incentive workers," piece rate workers in particular, earned more, on average, than time-rated workers.
Thus, mean earnings should be higher for piece rate workers than for salaried workers.
When I restrict the CPS sample to workers who are less then 34 years old, the percentage of piece rate workers is even lower, at about 3.
Previous studies, such as Brown (1992), Seiler (1984), and Ewing (1996), have all found that piece rate workers earn more than either salaried workers or hourly paid workers.
However, even if piece rate workers are found not to enjoy any wage premium once fixed-effects are used, it would be premature to conclude that incentives do not play a role.
Looking at the results for men, we can see in column 1 that OLS estimates indicate, consistent with prior evidence, that piece rate workers and bonus workers earn higher average wages than workers paid on a hourly basis or paid salaries.