Paying for Performance: Incentive Pay Schemes and Employees' Financial Participation
AbstractWe present new comparable data on the incidence of performance pay schemes in Europe and the USA. We find that the percentage of employees exposed to incentive pay schemes ranges from around 10-15 percent in some European countries to over 40 percent in Scandinavian countries and the US. Individual pay and profit/gain sharing schemes are widely diffused, whereas share ownership schemes are much less common, particularly in Europe. We document a number of empirical regularities. Incentive pay is less common in countries with a higher share of small firms. Higher product and labour market regulation are associated with lower use of incentive pay. Capital market development is a necessary requirement for a wider diffusion of incentive pay, particularly sharing and ownership schemes. When we control for a large set of individual characteristics and company attributes, we find that the probability that a worker is covered by an incentive scheme is higher in large firms and in high-skilled occupations, while it is much lower for females.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1112.
Date of creation: Jan 2012
Date of revision:
Contact details of provider:
Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
performance pay; financial participation; institutions;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-18 (All new papers)
- NEP-BEC-2012-01-18 (Business Economics)
- NEP-EUR-2012-01-18 (Microeconomic European Issues)
- NEP-HRM-2012-01-18 (Human Capital & Human Resource Management)
- NEP-LAB-2012-01-18 (Labour Economics)
- NEP-LMA-2012-01-18 (Labor Markets - Supply, Demand, & Wages)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Richard B. Freeman & Joseph R. Blasi & Douglas L. Kruse, 2010. "Introduction to "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options"," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 1-37 National Bureau of Economic Research, Inc.
- Hatton, Timothy J., 1987.
"Profit Sharing in British Industry, 1865-1913,"
CEPR Discussion Papers
204, C.E.P.R. Discussion Papers.
- Barth, Erling & Bratsberg, Bernt & Haegeland, Torbjørn & Raaum, Oddbjørn, 2009.
"Performance Pay and Within-Firm Wage Inequality,"
IZA Discussion Papers
4137, Institute for the Study of Labor (IZA).
- Erling Barth & Bernt Bratsberg & Torbjørn Hægeland & Oddbjørn Raaum, 2008.
"Who pays for performance?,"
International Journal of Manpower,
Emerald Group Publishing, vol. 29(1), pages 8-29, May.
- Arindrajit Dube & Richard Freeman, 2008.
"Complementarity of Shared Compensation and Decision-Making Systems: Evidence from the American Labor Market,"
NBER Working Papers
14272, National Bureau of Economic Research, Inc.
- Arindrajit Dube & Richard B. Freeman, 2010. "Complementarity of Shared Compensation and Decision-Making Systems: Evidence from the American Labor Market," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 167-199 National Bureau of Economic Research, Inc.
- Jones, Derek C & Kato, Takao, 1995. "The Productivity Effects of Employee Stock-Ownership Plans and Bonuses: Evidence from Japanese Panel Data," American Economic Review, American Economic Association, vol. 85(3), pages 391-414, June.
- Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options," NBER Books, National Bureau of Economic Research, Inc, number krus08-1.
- Guillermo Alves & Gabriel Burdin & Paula Carrasco & Andrés Dean & Andrés Rius, 2012. "Empleo, remuneraciones e inversión en cooperativas de trabajadores y empresas convencionales: nueva evidencia para Uruguay," Documentos de Trabajo (working papers) 12-14, Instituto de Economia - IECON.
- Gabriel Burdin, 2012.
"Does workers’ control affect firm survival? Evidence from Uruguay,"
Documentos de Trabajo (working papers)
12-06, Instituto de Economia - IECON.
- Gabriel Burdin, 2012. "Does workers’ control affect firm survival? Evidence from Uruguay," Department of Economics University of Siena 641, Department of Economics, University of Siena.
- Burdín, Gabriel, 2012. "Does workers' control affect firm survival? Evidence from Uruguay," AICCON Working Papers 108-2012, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
- repec:old:wpaper:348 is not listed on IDEAS
- Carsten Helm & Dominique Demougin, 2012. "Incentive Contracts and Efficient Unemployment Benefits in a Globalized World," Working Papers V-348-12, University of Oldenburg, Department of Economics, revised Aug 2012.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.