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Does Performance Pay Increase the Risk of Marital Instability?

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  • Mehrzad B. Baktash
  • John S. Heywood
  • Uwe Jirjahn

Abstract

This paper uses German survey data on married couples to examine the association of performance pay at work and subsequent separation or divorce. Despite extensive controls, performance pay remains associated with an increased probability of separation or divorce. Yet, the results are entirely gender specific. When husbands earn performance pay, no association with marital instability is found. When wives earn performance pay, the association is large and robust. This pattern persists across a variety of modeling choices and attempts to account for endogeneity. We argue that the pattern fits theoretical expectations and discuss the implications.

Suggested Citation

  • Mehrzad B. Baktash & John S. Heywood & Uwe Jirjahn, 2023. "Does Performance Pay Increase the Risk of Marital Instability?," Research Papers in Economics 2023-06, University of Trier, Department of Economics.
    • Handle: RePEc:trr:wpaper:202306
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    More about this item

    Keywords

    Performance Pay; Separation; Divorce; Gender;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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