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Performance Pay Systems and the Gender Wage Gap

Author

Listed:
  • Richard Fabling

    (Motu Economic and Public Policy Research)

  • Arthur Grimes

    (Motu Economic and Public Policy Research and University of Auckland)

  • David C. Maré

    (Motu Economic and Public Policy Research)

Abstract

We examine the relationship between performance pay systems and wages, paying particular attention to gender differences in outcomes. At the firm level, estimates suggest average wages are unaffected by changes in performance pay practices, but that the within-firm distribution of wages is stretched. This latter result is explained by worker-level regressions, showing that male workers with initially higher expected wages are more likely to benefit from increased use of performance pay in the firm. Given the apparent absence of such an effect on female wages and the concentration of prime-age men in the top quartile of the wage distribution, women, on average, benefit less from the operation of performance pay systems.

Suggested Citation

  • Richard Fabling & Arthur Grimes & David C. Maré, 2012. "Performance Pay Systems and the Gender Wage Gap," Motu Working Papers 12_13, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:12_13
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    References listed on IDEAS

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    Cited by:

    1. Richard Fabling & Arthur Grimes, 2019. "Ultra-fast broadband, skill complementarities, gender and wages," Motu Working Papers 19_23, Motu Economic and Public Policy Research.
    2. Sylvia Fuller & Lynn Prince Cooke, 2018. "Workplace Variation in Fatherhood Wage Premiums: Do Formalization and Performance Pay Matter?," Work, Employment & Society, British Sociological Association, vol. 32(4), pages 768-788, August.
    3. Dave Maré, 2022. "Pay gaps - an $18 billion a year issue," Motu Notes Note_45, Motu Economic and Public Policy Research.
    4. John S. Heywood & Daniel Parent, 2017. "Performance Pay, the Gender Gap, and Specialization within Marriage," Journal of Labor Research, Springer, vol. 38(4), pages 387-427, December.

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    More about this item

    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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