Is a Higher Calling Enough? Incentive Compensation in the Church

40 Pages Posted: 19 Nov 2008 Last revised: 28 Feb 2010

See all articles by Jay C. Hartzell

Jay C. Hartzell

University of Texas at Austin - Department of Finance

Christopher A. Parsons

Foster School of Business, University of Washington

David Yermack

New York University (NYU) - Stern School of Business

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Date Written: February 8, 2010

Abstract

We study the compensation and productivity of more than 2,000 Methodist ministers in a 43-year panel data set. The church appears to use pay-for-performance incentives for its clergy, as their compensation follows a sharing rule by which pastors receive approximately 3% of the incremental revenue from membership increases. Ministers receive the strongest rewards for attracting new parishioners who switch from other congregations within their denomination. Monetary incentives are weaker in settings where ministers have less control over their measured performance.

Keywords: Compensation, Incentives, Churches, Religion

JEL Classification: G30, J30, J33, J45

Suggested Citation

Hartzell, Jay C. and Parsons, Christopher A. and Yermack, David, Is a Higher Calling Enough? Incentive Compensation in the Church (February 8, 2010). Journal of Labor Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1303853 or http://dx.doi.org/10.2139/ssrn.1303853

Jay C. Hartzell (Contact Author)

University of Texas at Austin - Department of Finance ( email )

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Austin, TX 78712
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HOME PAGE: http://www.mccombs.utexas.edu/faculty/jay.hartzell/

Christopher A. Parsons

Foster School of Business, University of Washington ( email )

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David Yermack

New York University (NYU) - Stern School of Business ( email )

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212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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