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Does Performance Pay Influence Hours of Work?

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  • Green, Colin P.

    (Norwegian University of Science and Technology (NTNU))

  • Heywood, John S.

    (University of Wisconsin, Milwaukee)

Abstract

A large body of research links performance pay to poorer worker health. The exact mechanism generating this link remains in doubt. We examine a common suspect, that performance pay causes employees to work longer hours in pursuit of higher pay. Using representative data for the UK, we demonstrate that performance pay is associated with more work hours and a higher probability of working long hours. Yet approximately two thirds of these differences reflect worker sorting rather than behavioral change. The remaining influence appears too small to generate the differences in health except for blue-collar occupations that we isolate.

Suggested Citation

  • Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15474
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    References listed on IDEAS

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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.

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    More about this item

    Keywords

    performance related pay; working hours;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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