Not logged in.
Quick Search - Contribution
Contribution Details
| Type | Other Publication |
| Scope | Discipline-based scholarship |
| Title | The Determinants and Earnings Effects of Performance Pay |
| Organization Unit | |
| Authors |
|
| Language |
|
| How Published | |
| Date | 2010 |
| Abstract Text | Using a unique dataset containing separate information on the base and bonus pay of over a million workers, we provide novel evidence on the determinants and earnings effects of performance pay. Several observables—in particular age, education, tenure, and job complexity—have a large impact on both the likelihood and the magnitude of performance pay. Performance pay workers earn a sizable wage premium compared to salary workers, and the earnings premium is larger for men than for women. The wage functions differ markedly between salary and performance pay workers. In particular, the earnings premia associated with age, job complexity, and managerial position are much larger for performance pay workers than for salary workers. The difference in these earnings premia can in part be explained by the fact that heterogeneity among workers increases with age, job complexity, and managerial position. It accounts for about half of the earnings differential between salary and performance pay workers. A separate analysis of the base pay and bonus components of performance pay workers’ earnings reveals that workers who receive higher base pay also get larger bonuses, and that observables predict base pay much better than bonuses. |
| Export |
BibTeX
|