NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Ownership, Agency and Wages: An Examination in the Fast Food Industry

Alan B. Krueger

NBER Working Paper No. 3334
Issued in April 1990
NBER Program(s):   LS

This paper estimates the difference in compensation between company-owned and franchisee-owned fast food restaurants. The contrast is of interest because contractual arrangements give managers of company-owned outlets less of an incentive to monitor and supervise employees. Estimates based on two data sets suggest that employee compensation is slightly greater at company-owned outlets than franchisee-owned outlets. The earnings gap is 9 percent for assistant and shift managers and 2 percent for full-time crew workers. Furthermore. the tenure-earnings profile is steeper at company-owned restaurants. These findings suggest that monitoring difficulties influence the timing and generosity of compensation.

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Document Object Identifier (DOI): 10.3386/w3334

Published: The Quarterly Journal of Economics, 106, February 1991, pp. 75-102

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