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Confronting Objections to Performance Pay: A Study of the Impact of Individual and Gain-sharing Incentives on the Job Satisfaction of British Employees

  • Pouliakas, Konstantinos
  • Theodossiou, Ioannis

The increasing use of incentive pay schemes in recent years has raised concerns about their potential detrimental effect on intrinsic job satisfaction (JS), job security and employee morale. This study explores the impact of pay incentives on the overall job satisfaction of workers in the UK and their satisfaction with various facets of jobs. Using data from eight waves (1998-2005) of the British Household Panel Survey (BHPS) and a uniquely-designed well-being dataset (EPICURUS), a significant positive impact on job satisfaction is only found for those receiving fixed-period bonuses. These conclusions are robust to unobserved heterogeneity, and are shown to depend on a number of job-quality characteristics that have not been controlled for in previous studies.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14244.

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Date of creation: 03 Mar 2009
Date of revision:
Handle: RePEc:pra:mprapa:14244
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  9. Daniel Parent, 1999. "Methods of pay and earnings: A longitudinal analysis," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(1), pages 71-86, October.
  10. McCausland, David & Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction," MPRA Paper 14243, University Library of Munich, Germany.
  11. Tor Eriksson & Marie-Claire Villeval, 2004. "Other-Regarding Preferences and Performance Pay - An Experiment on Incentives and Sorting," Post-Print halshs-00180115, HAL.
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