Does Performance Pay Increase the Risk of Worker Loneliness?

Mehrzad B. Baktash

No 2024-12, Research Papers in Economics from University of Trier, Department of Economics

Abstract: Increased wages and productivity associated with performance pay can be beneficial to both employers and employees. However, performance pay can also entail unintended consequences for workers’ well-being. This study is the first to systematically examine the association between performance pay and loneliness, a significant social well-being concern. Using representative survey data from Germany, I find that performance pay is positively associated with incidence, dimensions, and intensity of loneliness. Correspondingly, performance pay is negatively associated with social life satisfaction of the workers. The findings also hold in sensible instrumental variable estimations addressing the potential endogeneity of performance pay and in various robustness checks. Investigating the potential role of moderating factors reveals that the association between performance pay and loneliness is particularly large for private sector employees. Finally, implications are discussed.

Keywords: Performance Pay; Loneliness; Social Life; Well-Being; SOEP (search for similar items in EconPapers)
JEL-codes: I10 I31 J32 J33 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2024
New Economics Papers: this item is included in nep-eff, nep-hap, nep-hrm and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:trr:wpaper:202412

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