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Does Performance Pay Increase the Risk of Worker Loneliness?

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  • Baktash, Mehrzad B.

Abstract

Increased wages and productivity associated with performance pay can be beneficial to both employers and employees. However, performance pay can also entail unintended consequences for workers' well-being. This study is the first to systematically examine the association between performance pay and loneliness, a significant social well-being concern. Using representative survey data from Germany, I find that performance pay is positively associated with incidence, dimensions, and intensity of loneliness. Correspondingly, performance pay is negatively associated with social life satisfaction of the workers. The findings also hold in sensible instrumental variable estimations addressing the potential endogeneity of performance pay and in various robustness checks. Investigating the potential role of moderating factors reveals that the association between performance pay and loneliness is particularly large for private sector employees. Finally, implications are discussed.

Suggested Citation

  • Baktash, Mehrzad B., 2024. "Does Performance Pay Increase the Risk of Worker Loneliness?," GLO Discussion Paper Series 1524, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1524
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    More about this item

    Keywords

    Performance Pay; Loneliness; Social Life; Well-Being; SOEP;
    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
    • I10 - Health, Education, and Welfare - - Health - - - General

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