The Unintended Consequences of the Rat Rate: The Detrimental Effects of Performance Pay on Health


Σειρά Δημοσιεύσεων Οικονομικού Τμήματος, Αρ. 27



Although performance pay schemes have been linked to labour market productivity, one unintended consequence, suggested as early as Adam Smith, is that performance pay is detrimental to health. Recent research has shown that there is a positive relationship between performance pay and injuries on the job. This paper focuses on the consequences of performance pay on health and investigates if there is a link between performance pay and self- reported general health or specific illnesses. Using data from the British Household Panel Survey, this study utilizes survival analysis to show that being in jobs with a performance pay element increases the likelihood of health deterioration, ceteris paribus.

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