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The Recognition and Reward of Employee Performance

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  • Bishop, John

Abstract

This paper examines when and to what extent an individual's relative wage de pends on his/her productivity relative to others doing the same job. Starting wages were influenced by background characteristics and trai ning cost realizations but not by relative productivity. Wages one ye ar later were influenced by productivity but the effects were small. The wage elasticity was 0.2 at small establishments and 0.0 at establ ishments with over four hundred employees. The wage response to relat ive pro-ductivity and training costs was weaker in small labor market s, suggesting that wages do not fully respond to performance because of the firm specificity of job performance differentials. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Bishop, John, 1987. "The Recognition and Reward of Employee Performance," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 36-56, October.
  • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s36-56
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Harley Frazis & Mark A Loewenstein, 2006. "Wage Compression and the Division of Returns to Productivity Growth: Evidence from EOPP," Working Papers 398, U.S. Bureau of Labor Statistics.
    2. Bowman, William R. & Mehay, Stephen L., 1999. "Graduate education and employee performance: evidence from military personnel," Economics of Education Review, Elsevier, vol. 18(4), pages 453-463, October.
    3. Schlicht, Ekkehart, 2007. "Wage Dispersion, Over-Qualification, and Reder Competition," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 1, pages 1-22.
    4. W. Bentley MacLeod & Daniel Parent, 1998. "Job Characteristics and the Form of Compensation," CIRANO Working Papers 98s-08, CIRANO.
    5. Serneels, Pieter, 2008. "Human capital revisited: The role of experience and education when controlling for performance and cognitive skills," Labour Economics, Elsevier, vol. 15(6), pages 1143-1161, December.
    6. Flabbi, Luca & Ichino, Andrea, 2001. "Productivity, seniority and wages: new evidence from personnel data," Labour Economics, Elsevier, vol. 8(3), pages 359-387, June.
    7. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    8. Todd R. Zenger & Sergio G. Lazzarini, 2004. "Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(6-7), pages 329-345.
    9. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    10. Harry J. Holzer, 1989. "Wages, Employer Costs, and Employee Performance in the Firm," NBER Working Papers 2830, National Bureau of Economic Research, Inc.
    11. Eriksson, Stefan & Gottfries, Nils, 2005. "Ranking of job applicants, on-the-job search, and persistent unemployment," Labour Economics, Elsevier, vol. 12(3), pages 407-428, June.
    12. van Dalen, Hendrik P., 1996. "Pitfalls in the economic analysis of aging," Journal of Policy Modeling, Elsevier, vol. 18(2), pages 157-184, April.
    13. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    14. Canice Prendergast, 1996. "What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies," NBER Working Papers 5802, National Bureau of Economic Research, Inc.
    15. Gerst, Benedikt & Grund, Christian, 2017. "Career Interruptions and Current Earnings: The Role of Interruption Type, Compensation Component, and Gender," IZA Discussion Papers 10713, Institute for the Study of Labor (IZA).
    16. Pieter Serneels, 2005. "Do Wages reflect Productivity?," Economics Series Working Papers GPRG-WPS-029, University of Oxford, Department of Economics.
    17. William Blankenau & Gabriele Camera, 2006. "A Simple Economic Theory of Skill Accumulation and Schooling Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 93-115, January.
    18. Tennert, Julius & Lambert, Marie & Burghof, Hans-Peter, 2017. "Moral hazard in VC finance: More expensive than you thought," Hohenheim Discussion Papers in Business, Economics and Social Sciences 02-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    19. Richard K. Johanson & Arvil V. Adams, 2004. "Skills Development in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15028.

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