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Research Paper IZA Discussion Papers 4713

Pay enough, don't pay too much or don't pay at all? The impact of bonus intensity on job satisfaction

Authors

Publication date

01 Jan 2010

Abstract

Using ten waves (1998-2007) of the British Household Panel Survey (BHPS), this paper investigates the ceteris paribus association between the intensity of incentive pay, the dynamic change in bonus status and the utility derived from work. After controlling for individual heterogeneity biases, it is shown that job utility rises only in response to 'generous' bonus payments, primarily in skilled, non-unionized, private sector jobs. Revoking a bonus from one year to the next is found to have a detrimental impact on employee utility, while job satisfaction tends to diminish over time as employees potentially adapt to bonuses. The findings are therefore consistent with previous experimental evidence, suggesting that employers wishing to motivate their staff should indeed 'pay enough or don't pay at all'.

Subjects

Labour Market, Wages And Earnings, and Well Being

Links

http://EconPapers.repec.org/RePEc:iza:izadps:dp4713

Notes

SSRN search; working paper

#513301


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