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IZA Discussion Paper No. 15474
August 2022
Does Performance Pay Influence Hours of Work?

published as 'Performance pay, work hours and employee health in the UK' in: Labour Economics, 2023, 84, 102387

A large body of research links performance pay to poorer worker health. The exact mechanism generating this link remains in doubt. We examine a common suspect, that performance pay causes employees to work longer hours in pursuit of higher pay. Using representative data for the UK, we demonstrate that performance pay is associated with more work hours and a higher probability of working long hours. Yet approximately two thirds of these differences reflect worker sorting rather than behavioral change. The remaining influence appears too small to generate the differences in health except for blue-collar occupations that we isolate.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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