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Performance Pay Systems and the Gender Wage Gap

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  • Richard Fabling

    ()
    (Motu Economic and Public Policy Research)

  • Arthur Grimes

    ()
    (Motu Economic and Public Policy Research and University of Auckland)

  • David C. Maré

    ()
    (Motu Economic and Public Policy Research)

Abstract

We examine the relationship between performance pay systems and wages, paying particular attention to gender differences in outcomes. At the firm level, estimates suggest average wages are unaffected by changes in performance pay practices, but that the within-firm distribution of wages is stretched. This latter result is explained by worker-level regressions, showing that male workers with initially higher expected wages are more likely to benefit from increased use of performance pay in the firm. Given the apparent absence of such an effect on female wages and the concentration of prime-age men in the top quartile of the wage distribution, women, on average, benefit less from the operation of performance pay systems.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 12_13.

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Length: 34 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:mtu:wpaper:12_13

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Related research

Keywords: human resource management; personnel economics; gender wage gap; performance pay;

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References

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  1. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August.
  2. Datta Gupta, Nabanita & Eriksson, Tor, 2006. "New Workplace Practices and the Gender Wage Gap: Can the New Economy be the Great Equalizer?," IZA Discussion Papers 2038, Institute for the Study of Labor (IZA).
  3. Heywood, John S. & Parent, Daniel, 2009. "Performance Pay and the White-Black Wage Gap," CLSSRN working papers clsrn_admin-2009-42, Vancouver School of Economics, revised 22 Jul 2009.
  4. Richard Fabling, 2009. "A Rough Guide to New Zealand's Longitudinal Business Database," Global COE Hi-Stat Discussion Paper Series gd09-103, Institute of Economic Research, Hitotsubashi University.
  5. repec:ese:iserwp:2005-25 is not listed on IDEAS
  6. Weichselbaumer, Doris & Winter-Ebmer, Rudolf, 2003. "A Meta-Analysis of the International Gender Wage Gap," Economics Series 143, Institute for Advanced Studies.
  7. Robert Gibbons, 1998. "Incentives in Organizations," NBER Working Papers 6695, National Bureau of Economic Research, Inc.
  8. Richard Fabling & Arthur Grimes, 2009. "The "suite" smell of success: complementary personnel practices and firm performance," Reserve Bank of New Zealand Discussion Paper Series DP2009/13, Reserve Bank of New Zealand.
  9. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2007. "Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wage Distribution," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(2), pages 163-186, January.
  10. John S. Heywood & Uwe Jirjahn, 2002. "Payment schemes and gender in Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 44-64, October.
  11. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
  12. Edward P. Lazear & Kathryn L. Shaw, 2007. "Personnel Economics: The Economist's View of Human Resources," NBER Working Papers 13653, National Bureau of Economic Research, Inc.
  13. Thomas Lemieux & W. Bentley MacLeod & Daniel Parent, 2009. "Performance Pay and Wage Inequality-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 1-49, February.
  14. Fidan Ana Kurtulus & Donald Tomaskovic-Devey, 2011. "Do Women Top Managers Help Women Advance? A Panel Study Using EEO-1 Records," UMASS Amherst Economics Working Papers 2011-14, University of Massachusetts Amherst, Department of Economics.
  15. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
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