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The Economics of Performance Appraisals

  • Marc-Arthur Diaye

    ()

    (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé)

  • Nathalie Greenan

    ()

    (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé)

Performance appraisals have become a widespread practice in OECD member countries. However, whereas the problem of constructing an optimal contract with subjective evaluation receives a lot of attention, rmlevel performance appraisals are strikingly left outside of economic theory. The purpose of this paper is threefold: rst, to theoretically de ne what performance appraisals are; second, to analyze the e ects of incentive contracts on e ort and wage using performance appraisals; and third, to theoretically quantify the selection e ects driven by the implementation of performance appraisals.

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Date of creation: 03 Aug 2012
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Handle: RePEc:hal:wpaper:halshs-00856229
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  1. Michael Gibbs & Wallace Hendricks, 2004. "Do Formal Salary Systems Really Matter?," ILR Review, Cornell University, ILR School, vol. 58(1), pages 71-93, October.
  2. Che,Y.K. & Yoo,S.W., 1998. "Optimal incentives for teams," Working papers 8, Wisconsin Madison - Social Systems.
  3. John T. Addison & Clive R. Belfield, 2008. "The Determinants of Performance Appraisal Systems: A Note (Do Brown and Heywood's Results for Australia Hold Up for Britain?)," British Journal of Industrial Relations, London School of Economics, vol. 46(3), pages 521-531, 09.
  4. Axel Engellandt & Regina T. Riphahn, 2011. "Evidence on Incentive Effects of Subjective Performance Evaluations," ILR Review, Cornell University, ILR School, vol. 64(2), pages 241-257, January.
  5. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
  6. James L. Medoff & Katharine G. Abraham, 1980. "Experience, Performance, and Earnings," NBER Working Papers 0278, National Bureau of Economic Research, Inc.
  7. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  8. Marc-Arthur Diaye & Nathalie Greenan & Michal W. Urdanivia, 2008. "Subjective Evaluation of Performance and Evaluation Interview: Empirical Evidence from France," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 107-131 National Bureau of Economic Research, Inc.
  9. Bentley MacLeod, 2001. "Optimal Contracting with Subjective Evaluation," Theory workshop papers 357966000000000036, UCLA Department of Economics.
  10. repec:eme:rlepps:v:18:y:1999:i:1999:p:177-242 is not listed on IDEAS
  11. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 881-919.
  12. Michelle Brown & John S. Heywood, 2005. "Performance Appraisal Systems: Determinants and Change," British Journal of Industrial Relations, London School of Economics, vol. 43(4), pages 659-679, December.
  13. Marc-Arthur Diaye & Nathalie Greenan & Michal Urdanivia, 2007. "Subjective Evaluation of Performance Through Individual Evaluation Interview: Empirical evidence from France," NBER Working Papers 12979, National Bureau of Economic Research, Inc.
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