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Performance-related Pay and the UK Gender Pay Gap

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  • Jones, Melanie
  • Kaya, Ezgi

Abstract

This paper explores the role of performance-related pay to the UK gender pay gap at the mean and across the earnings distribution. Applying decomposition methods to data from the Annual Survey of Hours and Earnings, we find that performance-related pay is an important but neglected factor, with the lower probability of females being employed in performance-related pay jobs explaining 12 per cent of the observed mean gender pay gap and making a larger contribution than many work-related characteristics routinely included in studies of this nature. Driven by its influence in the private sector, employment in performance-related pay jobs is more important in explaining the gender pay gap at the top end of the wage distribution, consistent with gender differences in receipt of bonus payments. Gender differences in the reward to performance-related pay jobs have a further, but more modest, role in widening the national and private sector mean gender pay gap.

Suggested Citation

  • Jones, Melanie & Kaya, Ezgi, 2022. "Performance-related Pay and the UK Gender Pay Gap," GLO Discussion Paper Series 1211, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1211
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    More about this item

    Keywords

    gender pay gap; performance-related pay; earnings distribution; sector;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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