When Piece Rates Work: More Lessons from the Cotton Mills

Workers paid by the piece should in principle cooperate with new techniques that increase their output. In practice, however, firms seem unable to keep piece rates fixed, and when they cut rates workers often respond by restricting output. This paper investigates a case where in fact firms abstained from cutting rates and workers refrained from reducing effort. In Lancashire cotton spinning workers and firms negotiated piece rate lists which fixed standard rates of pay. Both parties had incentives to keep at bay the forces of competition. The lists gave workers a share in the gains of technical change, and they allowed firms to reap the benefits of regional specialisation. The lists were enforced by community standards.
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