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Contracts, pay and performance in the sport of kings: Evidence from horse racing

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  • David Butler
  • Robert Butler
  • Robert Simmons

Abstract

A considerable body of evidence shows that performance‐related pay schemes can raise worker productivity with much of this increase due to worker sorting. However, variations in the power of performance‐related pay contracts are rarely observed. The thoroughbred horse racing industry offers such an opportunity. Contrary to earlier research, we find no evidence of worker shirking when the power of incentive contracts is reduced through jockeys switching from complete performance‐related pay schemes into a salaried (retainer) contract. Moreover, salary contracts result in legacy effects with superior performance continuing for elite jockeys even after their salary agreements have expired. We argue this is due to a reduction in monitoring costs.

Suggested Citation

  • David Butler & Robert Butler & Robert Simmons, 2022. "Contracts, pay and performance in the sport of kings: Evidence from horse racing," British Journal of Industrial Relations, London School of Economics, vol. 60(1), pages 152-175, March.
    • Handle: RePEc:bla:brjirl:v:60:y:2022:i:1:p:152-175
    DOI: 10.1111/bjir.12600
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    References listed on IDEAS

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