Contracts, pay and performance in the sport of kings: Evidence from horse racing

David Butler, Robert Butler and Robert Simmons

British Journal of Industrial Relations, 2022, vol. 60, issue 1, 152-175

Abstract: A considerable body of evidence shows that performance‐related pay schemes can raise worker productivity with much of this increase due to worker sorting. However, variations in the power of performance‐related pay contracts are rarely observed. The thoroughbred horse racing industry offers such an opportunity. Contrary to earlier research, we find no evidence of worker shirking when the power of incentive contracts is reduced through jockeys switching from complete performance‐related pay schemes into a salaried (retainer) contract. Moreover, salary contracts result in legacy effects with superior performance continuing for elite jockeys even after their salary agreements have expired. We argue this is due to a reduction in monitoring costs.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:bla:brjirl:v:60:y:2022:i:1:p:152-175

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