Performance-pay, sorting and social motivation

Variable pay links pay and performance but may also help firms to attract more productive employees. Our experiment investigates the impact of performance-pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that...

Full description

Saved in:
Bibliographic Details
Published in:Journal of economic behavior & organization 2008-11, Vol.68 (2), p.412-421
Main Authors: Eriksson, Tor, Villeval, Marie Claire
Format: Article
Language:English
Subjects:
Attraction
Businesses
Efficiency wages
Employees
Experiment
Impact analysis
Incentives
Labour productivity
Motivation
Organizational behavior
Pay
Pay for performance
Performance-pay
Performance-pay Incentives Sorting Social motivation Experiment
Reputation
Skills
Social motivation
Sorting
Studies
Variance
Wages
Work incentives
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Variable pay links pay and performance but may also help firms to attract more productive employees. Our experiment investigates the impact of performance-pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that (i) the opportunity to switch from a fixed wage to variable pay scheme increases the average effort level and its variance, and (ii) high skill employees concentrate under the variable pay scheme; (iii) however, in repeated interactions, efficiency wages reduce the attraction of performance-pay. Social motivation and reputation influence both the provision of incentives and their sorting effect.
ISSN:0167-2681
1879-1751
0167-2681
DOI:10.1016/j.jebo.2007.10.003