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Does Performance Pay Increase Alcohol and Drug Use?

Colin Green (), John Heywood () and Benjamin Artz

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: Using a panel of young workers, we show cross-sectional evidence of greater alcohol and illicit drug use among those paid performance pay. Recognizing that this likely reflects worker sorting, we first control for risk and ability proxies. We then control for worker fixed effects and finally for worker-employer match fixed effects. These estimates continue to indicate that the risk of substance use increases when workers are moved to performance pay. While robustness tests examine heterogeneous responses, our evidence fits conjectures that stress and effort increase with performance pay as does the spillover coping mechanism of alcohol and drug use.

Keywords: Performance Pay; Alcohol; Drugs; Sorting (search for similar items in EconPapers)
JEL-codes: I12 J33 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-12-21
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 (3) Track citations by RSS feed

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Journal Article: Does performance pay increase alcohol and drug use? (2021) Downloads
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