Motu Working Paper 12-08
34 Pages Posted: 9 Jul 2012
Date Written: July 9, 2012
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.
Keywords: Human resource management, personnel economics, gender wage gap, performance pay
JEL Classification: D21, J31, O31
Suggested Citation: Suggested Citation
Fabling, Richard and Grimes, Arthur and Maré, David C., Performance Pay Systems and the Gender Wage Gap (July 9, 2012). Motu Working Paper 12-08. Available at SSRN: https://ssrn.com/abstract=2102434 or http://dx.doi.org/10.2139/ssrn.2102434