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Performance pay: trends and consequences introduction

Bender, Keith A. and Bryson, Alex (2013) Performance pay: trends and consequences introduction. National Institute Economic Review, 226 (1). R1-R3. ISSN 0027-9501

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Identification Number: 10.1177/002795011322600101


From First Principles, one of the key implications of standard labour economic theory is that workers should be paid their marginal product. Pay that is tied to a worker’s performance, therefore, would seem to provide the most direct link to satisfy this theoretical requirement (Lazear, 1986). Indeed, there is ample evidence that indicates that implementing pay for performance increases productivity through a combination of increased incentives for high productivity and incentives for highly productive workers to sort themselves into these types of jobs (e.g., Lazear, 2000; Haley, 2003; Gielen et al., 2010; Jones et al., 2010 and Bryson et al., 2013). Because of these potentially beneficial attributes of performance-related pay, much research has been devoted to identifying how widespread the pay practice is compared with other methods of compensation, how it has changed over time, how it is viewed by different labour market actors and whether it correlates (positively or negatively) with other labour market outcomes, as well as a host of other research questions.

Item Type: Article
Official URL:
Additional Information: © 2013 National Institute of Economic and Social Research
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
Date Deposited: 03 Jun 2014 14:40
Last Modified: 20 Feb 2021 05:07

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