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Keywords:

  • High involvement management;
  • High performance work system;
  • Incentive pay;
  • Information sharing;
  • Team working;
  • Training;
  • Wages

Summary.  Using nationally representative survey data for Finnish employees linked to register data on their wages and work histories we find that wage effects of high involvement management (HIM) practices are generally positive and significant. However, employees with better wage and work histories are more likely to enter HIM jobs. The wage premium falls substantially having accounted for employees’ work histories, which suggests that existing studies’ estimates are upwardly biased owing to positive selection into HIM. Results using standard regression techniques are robust to propensity score matching and instrumental variables estimation. The premium also rises with the number of HIM practices and differs markedly across different types of HIM practice.