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Please use this identifier to cite or link to this item: http://hdl.handle.net/2164/108

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Title: Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction
Authors: McCausland, W. David
Pouliakas, Kostas
Theodossiou, Ioannis
Keywords: performance-related pay
job satisfaction
endogeneity
self-selection
Issue Date: 23-Jan-2007
Series/Report no.: Business School Working Paper Series
2007-06
Abstract: Using an econometric procedure that corrects for both self-selection of individuals into their preferred compensation scheme and wage endogeneity, this study investigates whether significant differences exist in the job satisfaction of individuals receiving performance-related pay (PRP) compared to those on alternative compensation plans. Using data from four waves of the British Household Panel Survey (BHPS), it is found that PRP exerts a positive effect on the mean job satisfaction of (very) high-paid workers only. A potential explanation for this pattern could be that for lower-paid employees PRP is perceived to be controlling, whereas higher-paid workers derive a utility benefit from what they regard as supportive reward schemes. Using PRP as an incentive device in the UK could therefore be counterproductive in the long run for certain low-paid occupations.
URI: http://hdl.handle.net/2164/108
ISSN: 0143-4543
Appears in Collections:Property research
Economics research
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