This is the peer reviewed version of the following article: [Sessions, J. G. and Skåtun, J. D. (2017), Performance-Related Pay, Efficiency Wages and the Shape of the Tenure-Earnings Profile. The Manchester School, 85: 295–319], which has been published in final form at DOI: 10.1111/manc.12147. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.