The Dispersion of Bonus Payments within and between Firms

36 Pages Posted: 3 Apr 2017

See all articles by Christian Grund

Christian Grund

RWTH Aachen University - School of Economics and Business Administration; IZA Institute of Labor Economics

Tanja Hofmann

RWTH Aachen University

Abstract

We explore the dispersion of bonus payments of managers within and between five large firms from the German chemical sector. We use data from a yearly salary survey in these firms during the observation period 2008 to 2013. Bonus payments account for 20 percent of base salaries on average. Both the amount and the dispersion of bonus-to-base ratios differ across firms. We disentangle the dispersion between and within the levels of firms' hierarchies. Revealed differences are consistent with differences in firms' value statements.

Keywords: bonus payments, bonus to base rate, firm differences, pay policies, wage dispersion

JEL Classification: J31, J33, M52

Suggested Citation

Grund, Christian and Hofmann, Tanja, The Dispersion of Bonus Payments within and between Firms. IZA Discussion Paper No. 10642. Available at SSRN: https://ssrn.com/abstract=2944544

Christian Grund (Contact Author)

RWTH Aachen University - School of Economics and Business Administration ( email )

Aachen
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tanja Hofmann

RWTH Aachen University

Templergraben 55
52056 Aachen, 52056
Germany

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