Worker stress and performance pay: German survey evidence

Mehrzad B. Baktash, John Heywood and Uwe Jirjahn

Journal of Economic Behavior & Organization, 2022, vol. 201, issue C, 276-291

Abstract: While performance pay can benefit firms and workers by increasing productivity and wages, it has also been associated with a deterioration of worker health. The transmission mechanisms for this deterioration remain in doubt. We examine the hypothesis that increased stress is one transmission mechanism. Using unique survey data from the German Socio-Economic Panel, we find performance pay consistently and importantly associates with greater stress even controlling for a long list of economic, social and personality characteristics. The finding also holds in instrumental variable estimations accounting for the potential endogeneity of performance pay. Moreover, we show that risk tolerance and locus of control moderate the relationship between performance pay and stress. Among workers receiving performance pay, the risk tolerant and those believing they can control their environment suffer to a lesser degree from stress.

Keywords: Performance pay; Worker health; Stress; Risk tolerance; Locus of control (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (21)

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Working Paper: Worker Stress and Performance Pay: German Survey Evidence (2021)
Working Paper: Worker Stress and Performance Pay: German Survey Evidence (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:201:y:2022:i:c:p:276-291

DOI: 10.1016/j.jebo.2022.07.003

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