Performance-related pay and gender wage differences

Mari Kangasniemi and Antti Kauhanen ()

No 1249, Discussion Papers from The Research Institute of the Finnish Economy

Abstract: We study the impact of performance-related pay (PRP) on gender wage differences using Finnish linked employer-employee panel data. Controlling for unobserved person and firm effects, we find that bonuses increase womens earnings slightly less than mens, but the economic significance of the difference is negligible. Piece rates and reward rates, however, tend to increase gender wage differentials. Thus, the nature of a performance related pay plan is important for gauging the impact of PRP on gender wage differentials. A comparison with OLS results shows the importance of controlling for unobserved person and firm effects.

Keywords: gender wage differences; performance-related pay; person and firm effects; panel data (search for similar items in EconPapers)
JEL-codes: J16 J33 M52 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011
New Economics Papers: this item is included in nep-hrm and nep-lab
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Journal Article: Performance-related pay and gender wage differences (2013)
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