The Heterogeneous Effects of Bonus Pay on Performance Outcomes: Evidence from Personnel Data

Jan Sauermann

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: This study uses rich information on performance outcomes to estimate the effect of bonus pay on worker productivity. We use a policy discontinuity in the call centre of a multi-national telephone company in which management introduced monetary bonuses upon achieving pre-defined performance thresholds. The results show that the bonus is associated with an increase of a third of a standard deviation in the underlying performance outcome. This effect is mostly driven by low-ability agents whose performance improvement is about three times as large as for the average worker. Conversely, the treatment effect for high-ability agents is even negative. Furthermore, we find that other, non-incentivised performance outcomes are positively affected.

JEL-codes: J33 L96 M52 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-eff and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100568

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