Pay enough, don’t pay too much or don’t pay at all? An empirical study of the non-monotonic impact of incentives on job satisfaction

Konstantinos Pouliakas

MPRA Paper from University Library of Munich, Germany

Abstract: This paper attempts to test the non-monotonic effect of monetary incentives on job satisfaction. Specifically, 8 waves (1998-2005) of the British Household Panel Survey (BHPS) are used to investigate the ceteris paribus association between the intensity of bonus/profit-sharing payments and the utility derived from work. After controlling for individual heterogeneity biases, it is shown that relatively ‘small’ bonuses exert a significant negative effect on worker satisfaction. In contrast, job utility is found to rise only in response to ‘large’ bonus payments, primarily in skilled, non-unionized private sector jobs. The empirical evidence of the paper is therefore consistent with a ‘V-effect’ of incentives, suggesting that employers wishing to motivate their staff should indeed “pay enough or don’t pay at all”.

Keywords: Incentives; intensity; job satisfaction; non-monotonic (search for similar items in EconPapers)
JEL-codes: C23 J28 J33 (search for similar items in EconPapers)
Date: 2008-08-14
New Economics Papers: this item is included in nep-bec and nep-lab
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https://mpra.ub.uni-muenchen.de/10031/2/MPRA_paper_10031.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/20155/2/MPRA_paper_20155.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10031

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