Employment Contracts and Stress: Experimental Evidence

Julia L. Allan, Nicole Andelic, Keith Bender, Daniel Powell, Sandro Stoffel and Ioannis Theodossiou

No 838, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: A growing literature has found a link between performance-related pay (PRP) and poor health, but the causal direction of the relationship is not known. To address this gap, the current paper utilises a crossover experimental design to randomly allocate subjects into a work task paid either by performance or a fixed payment. Stress is measured through self-reporting and salivary cortisol. The study finds that PRP subjects had significantly higher cortisol levels and self-rated stress than those receiving fixed pay, ceteris paribus. By circumventing issues of self-report and self-selection, these results provide novel evidence for the detrimental effect PRP may have on health.

Keywords: performance-related pay; stress; experiment; cortisol (search for similar items in EconPapers)
JEL-codes: C91 I0 J33 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-exp, nep-hea, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Journal Article: Employment contracts and stress: Experimental evidence (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:838

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