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Performance Pay Systems and the Gender Wage GapRichard FablingMotu Economic and Public Policy Research Trust Arthur GrimesMotu Economic and Public Policy Research Trust David C. MaréMotu Economic and Public Policy Research Trust; University of Waikato - Economics July 9, 2012 Motu Working Paper 12-08 Abstract: We examine the relationship between performance pay systems and wages, paying particular attention to gender differences in outcomes. At the firm level, estimates suggest average wages are unaffected by changes in performance pay practices, but that the within-firm distribution of wages is stretched. This latter result is explained by worker-level regressions, showing that male workers with initially higher expected wages are more likely to benefit from increased use of performance pay in the firm. Given the apparent absence of such an effect on female wages and the concentration of prime-age men in the top quartile of the wage distribution, women, on average, benefit less from the operation of performance pay systems.
Number of Pages in PDF File: 34 Keywords: Human resource management, personnel economics, gender wage gap, performance pay JEL Classification: D21, J31, O31 working papers seriesDate posted: July 9, 2012Suggested CitationContact Information
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