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Do salaries improve worker performance?

  • Bryson, Alex
  • Buraimo, Babatunde
  • Simmons, Rob

We establish the effects of salaries on worker performance by exploiting a natural experiment in which some workers in a particular occupation (football referees) switch from short-term contracts to salaried contracts. Worker performance improves among those who move onto salaried contracts relative to those who do not. The finding is robust to the introduction of worker fixed effects indicating that it is not driven by better workers being awarded salary contracts. Nor is it sensitive to workers sorting into or out of the profession. Improved performance could arise from the additional effort workers exert due to career concerns, the higher income associated with career contracts (an efficiency wage effect) or improvements in worker quality arising from off-the-job training which accompanies the salaried contracts.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 4 (August)
Pages: 424-433

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Handle: RePEc:eee:labeco:v:18:y:2011:i:4:p:424-433
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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  11. Babatunde Buraimo & David Forrest & Robert Simmons, 2010. "The 12th man?: refereeing bias in English and German soccer," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(2), pages 431-449.
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  16. David Forrest & Ian McHale & Kevin McAuley, 2008. "“Say It Ain’t So”: Betting-Related Malpractice in Sport," International Journal of Sport Finance, Fitness Information Technology, vol. 3(3), pages 156-166, August.
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