Who Benefits from Benefits? Empirical Research on Tangible Incentives

36 Pages Posted: 28 Jan 2012

See all articles by Andrea Hammermann

Andrea Hammermann

affiliation not provided to SSRN

Alwine Mohnen

TUM School of Management; IZA Institute of Labor Economics


Although a broad field of literature on incentive theory exists, employer-provided tangible goods (hereafter called benefits) have so far been neglected by economic research. A remarkable exception is an empirical study by Oyer (2008). In our study, we test some of his findings by drawing on a German data set. We use two waves of the GSOEP data (2006, 2008) to analyze the occurrence of benefits and their effects on employees' satisfaction. Our results provide evidence for economic as well as psychological explanations. Looking at differences in firms' and employees' characteristics we find that cost efficiency concerns, the purpose to signal good working conditions and the aim to ease employees' effort costs are evident reasons to provide benefits. Furthermore, analyzing the impact of tangible and monetary incentives on satisfaction and employees' feeling of being acknowledged by employers, we find different motivational effects. Our results support the psychological explanation that benefits are evaluated separately from other monetary wage components and are more likely to express employers' concern for their employees and recognition of their performance.

Keywords: nonmonetary incentives, benefits, work motivation

JEL Classification: C83, J32, M52

Suggested Citation

Hammermann, Andrea and Mohnen, Alwine, Who Benefits from Benefits? Empirical Research on Tangible Incentives. IZA Discussion Paper No. 6284, Available at SSRN: https://ssrn.com/abstract=1994347

Andrea Hammermann (Contact Author)

affiliation not provided to SSRN

Alwine Mohnen

TUM School of Management ( email )

Arcisstrasse 21
Munich, DE 80333

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072

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