Performance-Related Pay and Objective Measures of Health after Correcting for Sample Selection

Nicole Andelic (), Julia Allan (), Keith Bender, Daniel Powell () and Ioannis Theodossiou
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Nicole Andelic: University of Aberdeen
Julia Allan: University of Stirling
Daniel Powell: University of Aberdeen

No 15000, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Much of the literature on performance-related pay (PRP) and poor health relies on self-reported data, and the relationship is particularly difficult to examine due to confounding variables. To address these limitations we examine three groups of health measures using data from the UKHLS: blood pressure (n=5667), inflammation markers in blood (n=4025) and self-reported health (n=6120). Physiological markers of health allow us to circumvent some of the issues associated with self-reported measures and by using size of firm and % share of PRP workers in occupation we also statistically control for some of the endogeneity associated with self-selection bias. Regressions correcting for self-selection bias and socio-demographic covariates find that PRP contracts are associated with poorer self-reported mental health, higher systolic blood pressure and higher levels of fibrinogen. These findings have implications for firms that use PRP as they may need to implement policies to mitigate against stress.

Keywords: performance-related pay; health; sample selection (search for similar items in EconPapers)
JEL-codes: I1 J33 M52 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2022-01
New Economics Papers: this item is included in nep-hea, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published as 'Performance-related Pay, Mental and Physiological Health' in: Industrial Relations , 2024, 63 (1), 3-25.

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