January 2012

IZA DP No. 6322: Design and Implementation of Pay for Performance

published in: C. R. Thomas and W. F. Shughart II (eds.), Oxford Handbook in Managerial Economics, Oxford University Press, 2013, 397-423

A large, mature and robust economic literature on pay for performance now exists, which provides a useful framework for thinking about pay for performance systems. I use the lessons of the literature to discuss how to design and implement pay for performance in practice.