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Some Evidence on the Relationship between Performance-Related Pay and the Shape of the Experience-Earnings Profile

Author

Listed:
  • Sarah Brown

    () (University of Sheffield)

  • John G. Sessions

    () (University of Bath)

Abstract

We investigate the relationship between performance-related pay (PRP) and the shape of workers' experience–earnings profiles. In particular, we argue that the slope of the profile depends critically upon the degree of ‘equity’ held by workers in their enterprise as measured by the extent of PRP. The implication is that the slope of the profile for PRP workers falls between those of their zero-equity fixed-wage, and one hundred per cent equity self-employed, counterparts. Our empirical analysis of three British data sets, namely the British Social Attitudes Survey, the British Household Panel Survey, and the British Family Expenditure Survey, supports this prior.

Suggested Citation

  • Sarah Brown & John G. Sessions, 2006. "Some Evidence on the Relationship between Performance-Related Pay and the Shape of the Experience-Earnings Profile," Southern Economic Journal, Southern Economic Association, vol. 72(3), pages 660-676, January.
  • Handle: RePEc:sej:ancoec:v:72:3:y:2006:p:660-676
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    Cited by:

    1. repec:bla:manchs:v:85:y:2017:i:3:p:295-319 is not listed on IDEAS
    2. Riaz, Fayyaz & Abdul Razzaq, Fiza & Waqar, Ahsan, 2017. "Effect of Employee Stock Ownership Plans (ESOPs) on the performance of Small business in Karachi," MPRA Paper 84322, University Library of Munich, Germany, revised 11 Nov 2017.
    3. John G. Sessions & Nikolaos Theodoropoulos, 2014. "Tenure, Wage Profiles and Monitoring," Research in Labor Economics,in: New Analyses of Worker Well-Being, volume 38, pages 105-162 Emerald Publishing Ltd.
    4. Hudson, John & Sessions, John G., 2009. "The Impact of Parental Education on Earnings:New Wine in an Old Bottle?," Department of Economics Working Papers 14762, University of Bath, Department of Economics.
    5. Joshy Easaw & Saeed Heravi, 2009. "Are household subjective forecasts of personal finances accurate and useful? A directional analysis of the British Household Panel Survey," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(8), pages 667-680.
    6. Hudson, John & Sessions, John G., 2011. "Parental education, labor market experience and earnings: New wine in an old bottle?," Economics Letters, Elsevier, vol. 113(2), pages 112-115.
    7. Ourania Karakosta & Nikos Tsakiris, 2009. "Indirect Tax Reforms and Public Goods under Imperfect Competition," University of Cyprus Working Papers in Economics 5-2009, University of Cyprus Department of Economics.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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