Do Salaries Improve Worker Performance?
AbstractWe establish the effects of salaries on worker performance by exploiting a natural experiment in which some workers in a particular occupation (football referees) switch from short-term contracts to salaried contracts. Worker performance improves among those who move onto salaried contracts relative to those who do not. The finding is robust to the introduction of worker fixed effects indicating that it is not driven by better workers being awarded salary contracts. Nor is it sensitive to workers sorting into or out of the profession. Improved performance could arise from the additional effort workers exert due to career concerns, the higher income associated with career contracts (an efficiency wage effect) or improvements in worker quality arising from off-the-job training which accompanies the salaried contracts.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1019.
Date of creation: Oct 2010
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incentives; salaries; productivity; sports;
Other versions of this item:
- Dr Alex Bryson, 2010. "Do Salaries Improve Worker Performance?," NIESR Discussion Papers 2738, National Institute of Economic and Social Research.
- A Bryson & B Buraimo & R Simmons, 2010. "Do Salaries Improve Worker Performance?," Working Papers 611478, Lancaster University Management School, Economics Department.
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-13 (All new papers)
- NEP-BEC-2010-11-13 (Business Economics)
- NEP-CTA-2010-11-13 (Contract Theory & Applications)
- NEP-MIC-2010-11-13 (Microeconomics)
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