The Performance Pay Premium and Wage Dispersion in Britain

16 Pages Posted: 14 Feb 2018

See all articles by Alex Bryson

Alex Bryson

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

John Forth

National Institute of Economic and Social Research (NIESR)

Lucy Stokes

National Institute of Economic and Social Research (NIESR)

Date Written: March 2018

Abstract

Estimates of the performance pay (PP) premium using household survey data are upwardly biased due to the use of PP contracts in higher paying workplaces. Using nationally representative linked employer‐employee data we estimate the PP premium at the mean and across the wage distribution, after accounting for workplace heterogeneity. We then present the effects of PP on the wage distribution. Failure to account for the use of PP in high paying workplaces overstates the PP premium by one‐third. The premium rises as one moves up the wage distribution, but the effect is more modest after having accounted for workplace heterogeneity.

Suggested Citation

Bryson, Alex and Forth, John and Stokes, Lucy, The Performance Pay Premium and Wage Dispersion in Britain (March 2018). The Manchester School, Vol. 86, Issue 2, pp. 139-154, 2018, Available at SSRN: https://ssrn.com/abstract=3122745 or http://dx.doi.org/10.1111/manc.12174

Alex Bryson (Contact Author)

UCL ( email )

20 Bedford Way
London, WC1H 0AL
United Kingdom

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/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

Lucy Stokes

National Institute of Economic and Social Research (NIESR)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
105
PlumX Metrics