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Performance Related Pay and Labor Productivity

Author

Listed:
  • Gielen, Anne C.

    (Erasmus University Rotterdam)

  • Kerkhofs, Marcel

    (Tilburg University)

  • van Ours, Jan C.

    (Erasmus School of Economics)

Abstract

This paper uses information from a panel of Dutch firms to investigate the labor productivity effects of performance related pay (PRP). We find that PRP increases labor productivity at the firm level with about 9% and employment with about 5%.

Suggested Citation

  • Gielen, Anne C. & Kerkhofs, Marcel & van Ours, Jan C., 2006. "Performance Related Pay and Labor Productivity," IZA Discussion Papers 2211, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2211
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    References listed on IDEAS

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    1. Paarsch, Harry J & Shearer, Bruce, 2000. "Piece Rates, Fixed Wages, and Incentive Effects: Statistical Evidence from Payroll Records," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 59-92, February.
    2. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    3. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-431, July.
    4. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    5. Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
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    Citations

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    Cited by:

    1. Gielen, A. C., 2007. "Performance Pay, Training and Labor Mobility," Other publications TiSEM 4e54354b-d7d3-4f97-a618-5, Tilburg University, School of Economics and Management.
    2. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Performance Pay as an Incentive for Lower Absence Rates in Britain," MPRA Paper 18238, University Library of Munich, Germany.
    3. Papps, Kerry L., 2010. "Productivity under Large Pay Increases: Evidence from Professional Baseball," IZA Discussion Papers 5133, Institute of Labor Economics (IZA).
    4. Origo, Federica, 2009. "Flexible pay, firm performance and the role of unions. New evidence from Italy," Labour Economics, Elsevier, vol. 16(1), pages 64-78, January.

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    More about this item

    Keywords

    labor productivity; performance related pay;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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