Who Fared Better? The Fortunes of Performance Pay and Fixed Pay Workers Through Recession

24 Pages Posted: 2 Nov 2017

See all articles by Lucy Stokes

Lucy Stokes

National Institute of Economic and Social Research (NIESR)

Alex Bryson

UCL ; National Institute of Economic and Social Research (NIESR)

John Forth

National Institute of Economic and Social Research (NIESR)

Martin R. Weale

National Institute of Economic and Social Research (NIESR)

Date Written: December 2017

Abstract

Using the Annual Survey of Hours and Earnings, we explore whether the fortunes of employees paid for performance differ from those of fixed pay workers during recession. Only in the bottom quintile of the wage distribution were performance pay employees more likely to experience greater falls in real wages than fixed pay employees. Accounting for fixed unobserved worker characteristics suggests that this was not due to the wage‐setting mechanism itself, but that other factors are likely to be at play. While across most of the earnings distribution there was little evidence of greater wage flexibility among performance pay employees, they did have longer job tenure than fixed pay employees over the recession.

Suggested Citation

Stokes, Lucy and Bryson, Alex and Forth, John and Weale, Martin R., Who Fared Better? The Fortunes of Performance Pay and Fixed Pay Workers Through Recession (December 2017). British Journal of Industrial Relations, Vol. 55, Issue 4, pp. 778-801, 2017, Available at SSRN: https://ssrn.com/abstract=3063626 or http://dx.doi.org/10.1111/bjir.12245

Lucy Stokes (Contact Author)

National Institute of Economic and Social Research (NIESR)

Alex Bryson

UCL ( email )

20 Bedford Way
London, WC1H 0AL
United Kingdom

HOME PAGE: http://https://iris.ucl.ac.uk/iris/browse/profile?upi=ABRYS65

National Institute of Economic and Social Research (NIESR) ( email )

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Smith Square
London, SW1P 3HE
United Kingdom

HOME PAGE: http://www.niesr.ac.uk/staff/staffdetail.php?StaffID=307

John Forth

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom

Martin R. Weale

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom

HOME PAGE: http://www.niesr.ac.uk/

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