Performance Pay, Sorting and the Dimensions of Job Satisfaction
Lancaster University - Department of Economics
John S. Heywood
University of Wisconsin at Milwaukee; University of Birmingham - Department of Commerce
November 22, 2006
This paper investigates the influence of performance related pay on several dimensions of job satisfaction. In cross-sectional estimates, performance related pay is associated with increased overall satisfaction, satisfaction with pay, satisfaction with job security and satisfaction with hours. It appears to be negatively associated with satisfaction with the work itself. Yet, after accounting for worker fixed-effects, the positive associations remain and the negative association vanishes. These results appear robust to a variety of alternative specifications and support the notion that performance pay allows increased opportunities for worker optimization and do not generally demotivate workers or crowd out intrinsic motivation.
Number of Pages in PDF File: 35
Keywords: Performance Pay, Job Satisfaction
JEL Classification: J28, J33working papers series
Date posted: May 3, 2007
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