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The Performance Pay Premium and Wage Dispersion in Britain

Bryson, Alex, Forth, J. ORCID: 0000-0001-7963-2817 and Stokes, L. (2018). The Performance Pay Premium and Wage Dispersion in Britain. The Manchester School, 86(2), pp. 139-154. doi: 10.1111/manc.12174

Abstract

Estimates of the performance pay (PP) premium using household survey data are upwardly biased due to the use of PP contracts in higher paying workplaces. Using nationally representative linked employer‐employee data we estimate the PP premium at the mean and across the wage distribution, after accounting for workplace heterogeneity. We then present the effects of PP on the wage distribution. Failure to account for the use of PP in high paying workplaces overstates the PP premium by one‐third. The premium rises as one moves up the wage distribution, but the effect is more modest after having accounted for workplace heterogeneity.

Publication Type: Article
Additional Information: This is the pre-peer reviewed version of the following article: Bryson, A. , Forth, J. and Stokes, L. (2018), The Performance Pay Premium and Wage Dispersion in Britain. The Manchester School, 86: 139-154., which has been published in final form at https://doi.org/10.1111/manc.12174. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
Subjects: H Social Sciences > HD Industries. Land use. Labor
Departments: Cass Business School > Management
URI: http://openaccess.city.ac.uk/id/eprint/20899
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