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Pay for Performance and Compensation Inequality: Evidence from the ECEC

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Listed:
  • Maury Gittleman
  • Brooks Pierce

    (Maury Gittleman is a Research Economist at the Bureau of Labor Statistics. Brooks Pierce is a Research Economist at the Bureau of Labor Statistics.)

Abstract

This article examines the relationship between performance-based pay and widening wage inequality using data from the Employer Costs for Employee Compensation (ECEC). The results suggest that jobs using performance-based pay have made only a modest contribution to increased inequality during the 1994 to 2010 period. These results contrast with those reported by Lemieux, MacLeod, and Parent (2009), who investigated the relationship between performance-based pay and wage inequality using the Panel Study of Income Dynamics. They found that pay for performance accounted for about one-fifth of the growth in the variance of male wages between the late 1970s and the early 1990s, and for almost all of the increase in wage inequality in the top quintile during the same period.

Suggested Citation

  • Maury Gittleman & Brooks Pierce, 2015. "Pay for Performance and Compensation Inequality: Evidence from the ECEC," ILR Review, Cornell University, ILR School, vol. 68(1), pages 28-52, January.
    • Handle: RePEc:sae:ilrrev:v:68:y:2015:i:1:p:28-52
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    Citations

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    Cited by:

    1. Bryan, Mark & Bryson, Alex, 2016. "Has performance pay increased wage inequality in Britain?," Labour Economics, Elsevier, vol. 41(C), pages 149-161.
    2. Janice Fanning Madden & Alexander Vekker, 2017. "Output-Based Performance Pay, Performance-Support Bias, and the Racial Pay Gap within a Large Retail Stock Brokerage," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 662-687, October.
    3. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
    4. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    5. Amy Finkelstein & Casey McQuillan & Owen Zidar & Eric Zwick, 2023. "The Health Wedge and Labor Market Inequality," Working Papers 2023-01, Princeton University. Economics Department..
    6. Hecht, Katharina, 2022. "It’s the value that we bring: performance pay and top income earners’ perceptions of inequality," LSE Research Online Documents on Economics 112212, London School of Economics and Political Science, LSE Library.

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