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Leisure time, performance pay, and crowding-out

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  • Vogelsang, Timo

Abstract

I study the performance effect of removing performance pay across various incentive domains. Subjects in the laboratory experiment receive performance pay in either the monetary or time domain during the first working period, after which the incentive is removed in the second working period. Removing performance pay decreases performance in all treatments compared to a baseline of no bonus. However, this effect is less pronounced in the time domain, where participants receive a time-off bonus that allows them to leave the laboratory earlier depending on their performance. A post-experimental questionnaire suggests reduced enjoyment of the task as a possible driver.

Suggested Citation

  • Vogelsang, Timo, 2023. "Leisure time, performance pay, and crowding-out," Economics Letters, Elsevier, vol. 231(C).
    • Handle: RePEc:eee:ecolet:v:231:y:2023:i:c:s0165176523002914
    DOI: 10.1016/j.econlet.2023.111266
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    References listed on IDEAS

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    More about this item

    Keywords

    Non-monetary reward; Performance pay; Crowding-out; Laboratory experiment; Time-off;
    All these keywords.

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • J - Labor and Demographic Economics
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

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