Does High Involvement Management Lead to Higher Pay?

Abstract

Using nationally representative survey data for Finnish employees linked to register data on their wages and work histories we find 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 suggesting that existing studies' estimates are upwardly biased due 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.