Performance Pay, Sorting and the Dimensions of Job Satisfaction

35 Pages Posted: 3 May 2007

See all articles by Colin P. Green

Colin P. Green

Department of Economics

John S. Heywood

University of Wisconsin at Milwaukee

Date Written: November 22, 2006

Abstract

This paper investigates the influence of performance related pay on several dimensions of job satisfaction. In cross-sectional estimates, performance related pay is associated with increased overall satisfaction, satisfaction with pay, satisfaction with job security and satisfaction with hours. It appears to be negatively associated with satisfaction with the work itself. Yet, after accounting for worker fixed-effects, the positive associations remain and the negative association vanishes. These results appear robust to a variety of alternative specifications and support the notion that performance pay allows increased opportunities for worker optimization and do not generally demotivate workers or crowd out intrinsic motivation.

Keywords: Performance Pay, Job Satisfaction

JEL Classification: J28, J33

Suggested Citation

Green, Colin P. and Heywood, John S., Performance Pay, Sorting and the Dimensions of Job Satisfaction (November 22, 2006). Available at SSRN: https://ssrn.com/abstract=983910 or http://dx.doi.org/10.2139/ssrn.983910

Colin P. Green (Contact Author)

Department of Economics ( email )

Trondheim NO-7491
Norway

John S. Heywood

University of Wisconsin at Milwaukee ( email )

3210 N. Maryland Avenue, Bolton Hall 802
Bolton Hall 802
Milwaukee, WI 53211
United States
414-229-4437 (Phone)
414-229-3860 (Fax)

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