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The unintended consequences of the rat race: the detrimental effects of performance pay on health

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  • Keith A. Bender
  • Ioannis Theodossiou

Abstract

Although performance pay schemes have been linked to labour market productivity, one unintended consequence, suggested early by Adam Smith, is that performance pay is detrimental to health. Recent research has shown that there is a positive relationship between performance pay and injuries on the job. This article focusses on the consequences of performance pay on health and investigates if there is a link between performance pay and self-reported general health or specific illnesses. Using data from the British Household Panel Survey, this study uses survival analysis to show that being in jobs with a performance pay element increases the likelihood of health deterioration, ceteris paribus.

Suggested Citation

  • Keith A. Bender & Ioannis Theodossiou, 2014. "The unintended consequences of the rat race: the detrimental effects of performance pay on health," Oxford Economic Papers, Oxford University Press, vol. 66(3), pages 824-847.
    • Handle: RePEc:oup:oxecpp:v:66:y:2014:i:3:p:824-847.
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    File URL: http://hdl.handle.net/10.1093/oep/gpt032
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    Citations

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    Cited by:

    1. Artz, Benjamin & Heywood, John S., 2022. "Performance Pay and Work Hours: US Survey Evidence," IZA Discussion Papers 15412, Institute of Labor Economics (IZA).
    2. Mehrzad B. Baktash & John S. Heywood & Uwe Jirjahn, 2022. "Performance pay and alcohol use in Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 353-383, October.
    3. Benjamin Artz & Colin P. Green & John S. Heywood, 2021. "Does performance pay increase alcohol and drug use?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 969-1002, July.
    4. Uwe Jirjahn & Jens Mohrenweiser, 2019. "Performance Pay and Applicant Screening," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 540-575, September.
    5. Andrew M. Jones & Nigel Rice & Francesca Zantomio, 2016. "Acute health shocks and labour market outcomes," Working Papers 2016:09, Department of Economics, University of Venice "Ca' Foscari".
    6. Baktash, Mehrzad B. & Heywood, John S. & Jirjahn, Uwe, 2023. "Does Performance Pay Increase the Risk of Marital Instability?," GLO Discussion Paper Series 1305, Global Labor Organization (GLO).
    7. Boal, William M., 2018. "Work intensity and worker safety in early twentieth-century coal mining," Explorations in Economic History, Elsevier, vol. 70(C), pages 132-149.
    8. Baktash, Mehrzad B. & Heywood, John S. & Jirjahn, Uwe, 2022. "Worker stress and performance pay: German survey evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 276-291.
    9. Green, Colin P. & Heywood, John S., 2022. "Does Performance Pay Influence Hours of Work?," IZA Discussion Papers 15474, Institute of Labor Economics (IZA).
    10. Jones, Andrew M. & Rice, Nigel & Zantomio, Francesca, 2020. "Acute health shocks and labour market outcomes: Evidence from the post crash era," Economics & Human Biology, Elsevier, vol. 36(C).
    11. Keith A. Bender & Colin P. Green & John S. Heywood, 2021. "Performance pay and assortative matching," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 485-493, September.
    12. Artz, Benjamin & Heywood, John S., 2020. "Unions, Worker Participation and Worker Well-Being," GLO Discussion Paper Series 705, Global Labor Organization (GLO).
    13. Bender, Keith A. & Bryson, Alex, 2013. "Performance Pay: Trends and Consequences Introduction," National Institute Economic Review, National Institute of Economic and Social Research, vol. 226, pages 1-3, November.
    14. Andelic, Nicole & Allan, Julia & Bender, Keith A. & Powell, Daniel & Theodossiou, Ioannis, 2022. "Performance-Related Pay and Objective Measures of Health after Correcting for Sample Selection," IZA Discussion Papers 15000, Institute of Labor Economics (IZA).
    15. Karsten Albæk & Tine Jeppesen & Bjørn Christian Arleth Viinholt, 2022. "PROTOCOL: Performance pay and employee health: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 18(3), September.
    16. Allan, Julia L. & Andelic, Nicole & Bender, Keith A. & Powell, Daniel & Stoffel, Sandro & Theodossiou, Ioannis, 2021. "Employment contracts and stress: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 360-373.
    17. Bruno S Frey & Jana Gallus, 2016. "Honors: A rational choice analysis of award bestowals," Rationality and Society, , vol. 28(3), pages 255-269, August.
    18. Green, Colin P. & Heywood, John S., 2023. "Performance pay, work hours and employee health in the UK," Labour Economics, Elsevier, vol. 84(C).

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