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Do Salaries Improve Worker Performance?

Author

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  • Alex Bryson
  • Babatunde Buraimo
  • Rob Simmons

Abstract

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.

Suggested Citation

  • Alex Bryson & Babatunde Buraimo & Rob Simmons, 2010. "Do Salaries Improve Worker Performance?," CEP Discussion Papers dp1019, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1019
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    Cited by:

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    2. Stefano Cabras & J. D. Tena, 2023. "Implicit institutional incentives and individual decisions: Causal inference with deep learning models," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(6), pages 3739-3754, September.
    3. Marcella Cartledge & Luke Taylor, 2022. "Incentive pay and decision quality: evidence from NCAA football coaches," Applied Economics, Taylor & Francis Journals, vol. 54(30), pages 3505-3520, June.
    4. Peter Dawson & Patrick Massey & Paul Downward, 2020. "Television match officials, referees, and home advantage: Evidence from the European Rugby Cup," Sport Management Review, Taylor & Francis Journals, vol. 23(3), pages 443-454, July.
    5. Rybaczewska, Maria & Sparks, Leigh & Sułkowski, Šukasz, 2020. "Consumers’ purchase decisions and employer image," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    6. Christian Deutscher & Eugen Dimant & Brad R. Humphreys & Adam Nowak, 2025. "Match Fixing and Sports Betting in Football: Empirical Evidence from the German Bundesliga," Public Finance Review, , vol. 53(5), pages 600-627, September.
    7. Dmitry Dagaev & Sofia Paklina & J. James Reade & Carl Singleton, 2024. "The Iron Curtain and Referee Bias in International Football," Journal of Sports Economics, , vol. 25(1), pages 126-151, January.
    8. Babatunde Buraimo & Rob Simmons & Marek Maciaszczyk, 2012. "Favoritism And Referee Bias In European Soccer: Evidence From The Spanish League And The Uefa Champions League," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 329-343, July.
    9. Peter Dawson, 2014. "Refereeing and infringement of the rules," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 24, pages 401-418, Edward Elgar Publishing.
    10. Besters, Lucas, 2018. "Economics of professional football," Other publications TiSEM d9e6b9b7-a17b-4665-9cca-1, Tilburg University, School of Economics and Management.
    11. Derek Lanoue, 2015. "Does it pay to win the Stanley Cup?," Working Papers 1502, University of Windsor, Department of Economics.

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    Keywords

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    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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