Pay Incentives and Truck Driver Safety: A Case Study

Abstract

This paper explores the safety consequences of increasing truck driver pay. The test case the authors examine involves a large over-the-road truckload firm that on February 25, 1997, raised wages an average of 39.1%. An analysis that controls for demographic and operational factors, including prior driving experience and experience acquired on the job, suggests that for drivers employed during the lower pay regime and retained in the higher pay regime, crash incidence fell. A higher pay rate also led to lower separation probability, but this indirect effect only translated into fewer crashes by increasing the retention of older, more experienced drivers. These findings suggest that human capital characteristics are important predictors of driver safety, but that motivational and incentive factors also are influential.