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Performance Pay and Work-Related Health Problems

Author

Listed:
  • Jed DeVaro
  • John S. Heywood

Abstract

Using panel data from 2004 and 2011, the authors find an elevated incidence of work-related ailments (associated with bones, muscles, and joints) in U.K. establishments that use individual performance pay, even after accounting for establishment fixed effects. Fixed-effect estimates also confirm a positive relationship between absence due to illness and performance pay. The elevated rates of ailments associated with performance pay appear to reduce financial performance and product quality, even though performance pay has a positive net influence on financial performance. Thus, a hidden cost of performance pay is occupational health deterioration. Parallel results are absent for labor productivity and, in a smaller sample, for profit.

Suggested Citation

  • Jed DeVaro & John S. Heywood, 2017. "Performance Pay and Work-Related Health Problems," ILR Review, Cornell University, ILR School, vol. 70(3), pages 670-703, May.
    • Handle: RePEc:sae:ilrrev:v:70:y:2017:i:3:p:670-703
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    Citations

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    Cited by:

    1. Benjamin Artz & John S Heywood, 2024. "Performance pay and work hours: US survey evidence," Oxford Economic Papers, Oxford University Press, vol. 76(3), pages 609-627.
    2. Jed DeVaro, 2022. "Performance pay, working hours, and health‐related absenteeism," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 327-352, October.
    3. Mehrzad B. Baktash & John S. Heywood & Uwe Jirjahn, 2022. "Performance pay and alcohol use in Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 353-383, October.
    4. Myeong-Hun Lim & Jin-Ha Yoon & Won-Tae Lee & Min-Seok Kim & Seong-Uk Baek & Jong-Uk Won, 2023. "Performance-Based Pay System and Job Stress Related to Depression/Anxiety in Korea: Analysis of Korea Working Condition Survey," IJERPH, MDPI, vol. 20(5), pages 1-13, February.
    5. Benjamin Artz & Colin P. Green & John S. Heywood, 2021. "Does performance pay increase alcohol and drug use?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 969-1002, July.
    6. Baktash, Mehrzad B. & Heywood, John S. & Jirjahn, Uwe, 2023. "Does Performance Pay Increase the Risk of Marital Instability?," GLO Discussion Paper Series 1305, Global Labor Organization (GLO).
    7. Baktash, Mehrzad B. & Heywood, John S. & Jirjahn, Uwe, 2022. "Worker stress and performance pay: German survey evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 276-291.
    8. Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, Institute of Labor Economics (IZA).
    9. Maczulskij, Terhi & Haapanen, Mika & Kauhanen, Antti & Riukula, Krista, 2021. "Dark Half: Decentralized Bargaining and Well-being at Work," ETLA Working Papers 89, The Research Institute of the Finnish Economy.

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