Some are punished and some are rewarded: A study of the impact of performance pay on job satisfaction

International Journal of Manpower

Volumn 26, Issue 7-8, 2005, Pages 636-659

  McCausland, W D ^a   Pouliakas, K ^a   Theodossiou, I ^a  

^a UNIVERSITY OF ABERDEEN   (United Kingdom)

Author keywords

Job satisfaction; Performance related pay; United Kingdom

Indexed keywords

EID: 27844506499     PISSN: 01437720     EISSN: None     Source Type: Journal    
DOI: 10.1108/01437720510628112     Document Type: Conference Paper

References (57)

1. Baker, G.P. (1992), "Incentive contracts and performance measurement", Journal of Political Economy, Vol. 100, pp. 598-614.
2. Benabou, R. and Tirole, J. (2003), "Intrinsic and extrinsic motivation", Review of Economic Studies, Vol. 70, pp. 489-520.
3. Booth, A. and Frank, J. (1999), "Earnings, productivity, and performance-related pay", Journal of Labor Economics, Vol. 17 No. 3, pp. 447-63.
4. Bound, J., Jaeger, D.A. and Baker, R.M. (1995), "Problems with instrumental variables estimation when the correlation between the instruments and the endogenous variable is weak", Journal of the American Statistical Association, Vol. 90 No. 430, pp. 443-50.
5. Blanchflower, D.G. and Oswald, A.J. (1999), "Well-being, insecurity and the decline of American job satisfaction", Working Paper University of Warwick.
6. Brown, C. (1990), "Firms choice of method of pay", Industrial and Labour Relations Review, Vol. 43 No. 3, pp. 165-82.
7. Brown, C. (1992), "Wage levels and methods of pay", The Rand Journal of Economics, Vol. 23 No. 3, pp. 366-75.
8. Burgess, S. and Ratto, M. (2003), "The role of incentives in the public sector: issues and evidence", CMPO Working Paper Series No. 03/071.
9. Clark, A.E. (1997), "Job satisfaction and gender: why are women so happy at work?", Labour Economics, Vol. 4, pp. 341-72.
10. Clark, A.E. (1999), "Are wages habit-forming? Evidence from micro data", Journal of Economic Behaviour and Organization, Vol. 39, pp. 179-200.
11. Clark, A.E. and Oswald, A.J. (1994), "Unhappiness and unemployment", Economic Journal, Vol. 104 No. 424, pp. 648-59.
12. Clark, A.E. and Oswald, A.J. (1996), "Satisfaction and comparison income", Journal of Public Economics, Vol. 61, pp. 359-81.
13. Clegg, C.W. (1983), "Psychology of employee lateness absence and turnover: methodology, a critique and an empirical study", Journal of Applied Psychology, Vol. 68, pp. 88-101.
14. Deci, E. (1971), "The effects of externally mediated rewards on intrinsic motivation", Journal of Personality and Social Psychology, Vol. 18 No. 1, pp. 105-15.
15. Deci, E. and Ryan, R.M. (1980), Intrinsic Motivation and Self-Determination in Human Behaviour, Plenum Press, New York, NY.
16. Drago, R. and Heywood, J.S. (1995), "The choice of payment schemes: Australian establishment data", working paper, University of Wisconsin, Madison, WI.
17. Drakopoulos, S.A. and Theodossiou, I. (1997), "Job satisfaction and target earnings", Journal of Economic Psychology, Vol. 18, pp. 693-704.
18. Easterlin, R.A. (2001), "Income and happiness: towards a unified theory", Economic Journal, Vol. 111, pp. 465-84.
19. Fehr, E. and Falk, A. (2002), "Psychological foundations of incentives", European Economic Review, Vol. 46, pp. 687-724.
20. Freeman, R.B. (1978), "Job satisfaction as an economic variable", The American Economic Review, Vol. 68 No. 2, pp. 135-41.
21. Frey, B.S. (1997), Not just for the Money: An Economic Theory of Personal Motivation, Edward Elgar, Cheltenham.
22. Frey, B.S. and Jegen, R. (2001), "Motivation crowding theory: a survey of empirical evidence", Journal of Economic Surveys, Vol. 15 No. 5, pp. 589-611.
23. Gardner, J. and Oswald, A.J. (2001), "What has been happening to the quality of workers' lives in Britain?", working paper, University of Warwick, available at: www.oswald.co.uk.
24. Goldin, C. (1986), "Monitoring costs and occupational segregation by sex", Journal of Labor Economics, Vol. 4 No. 1, pp. 1-27.
25. Grund, C. and Sliwka, D. (2003), "The impact of wage increases on job satisfaction: empirical evidence and theoretical implications", IZA Discussion Paper, Vol. 387.
26. Heckman, J.J. (1979), "Sample selection bias as a specification error", Econometrica, Vol. 47, pp. 153-61.
27. Holmstrom, B. (1979), "Moral hazard and observability", Bell Journal of Economics, Vol. 9, pp. 74-91.
28. Holmstrom, B. and Milgrom, P. (1991), "Multitask principal-agent analyses: incentive contracts, asset ownership, and job design", Journal of Law, Economics, and Organization, Vol. 7, pp. 24-52.
29. Judge, T.A., Bono, J.E., Thoresen, C.J. and Patton, G.K. (2001), "The job satisfaction-job performance relationship: a qualitative and quantitative review", Psychological Bulletin, Vol. 127 No. 3, pp. 376-407.
30. Kahneman, D., Wakker, P.P. and Sarin, R. (1997), "Back to Bentham? Explorations of experienced utility", Quarterly Journal of Economics, Vol. 2, pp. 375-405.
31. Kahneman, D., Diener, E. and Schwartz, N. (1999), Foundations of Hedonic Psychology: Scientific Perspectives on Enjoyment and Suffering, Russel Sage Foundation, New York, NY.
32. Kohn, A. (1993), Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A's, Praise, and Other Bribes, Mariner Books.
33. Kreps, D.M. (1997), "Intrinsic motivation and extrinsic incentives", The American Economic Review, Vol. 87 No. 2, pp. 359-64.
34. Lawler, E. and Porter, L.W. (1967), "The effect of performance on job satisfaction", Industrial Relations, Vol. 7, pp. 20-8.
35. Lazear, E.P. (1986), "Salaries and piece rates", Journal of Business, Vol. 59, pp. 405-31.
36. Lazear, E.P. (2000), "Performance pay and productivity", The American Economic Review, Vol. 90 No. 5, pp. 1346-61.
37. Lee, L.F. (1978), "Unionism and wage rates: a simultaneous equation model with qualitative and limited dependent variables", International Economic Review, Vol. 19, pp. 415-33.
38. Leontaridi, R.M. and Sloane, P.J. (2001), "Measuring the quality of jobs: promotion prospects, low pay and job satisfaction", LoWER working paper, No. 7, April.
39. Lepper, M., Greene, D. and Nisbett, R. (1973), "Undermining children's intrinsic interest with extrinsic reward", Journal Personality and Social Psychology, Vol. 28 No. 1, pp. 129-37.
40. Lydon, R. and Chevalier, A. (2002), "Estimates of the effects of wages on job satisfaction", Discussion Paper, Centre for Economic Performance, available at: www.cep.lse.ac.uk.
41. Malka, A. and Chatman, J.A. (2003), "Intrinsic and extrinsic work orientations as moderators of the effect of annual income on subjective well-being: a longitudinal study", Personality and Social Psychology Bulletin, Vol. 29 No. 6, pp. 737-46.
42. Marsden, D. and Richardson, R. (1992), "Motivation and performance related pay in the public sector: a case study of the inland revenue", Discussion Paper No. 75, Centre for Economic Performance/ cep.lse.ac.uk.
43. McAvinchey, I. and Mavromaras, K. (2004), The Estimation of Job Satisfaction with Endogenous Income, University of Aberdeen Mimeo, Aberdeen.
44. Mirlees, J. (1976), "The optimal structure of incentives and authority within an organization", Bell Journal of Economics, Vol. 7, pp. 105-31.
45. Murphy, K.J. (1999), "Executive compensation", in Ashenfelter, O. and Card, D. (Eds), Handbook of Labor Economics, North-Holland, Amsterdam, Vol. 3.
46. Parent, D. (1997), "Methods of pay and earnings: a longitudinal analysis", Scientific Series, CIRANO.
47. Pouliakas, K. and Theodossiou, I. (2004), "Confronting objections to performance pay: an analysis of the incentives-job satisfaction relationship after controlling for endogeneity", mimeo, University of Aberdeen, Aberdeen.
48. Pouliakas, K. and Theodossiou, I. (2005a), "Socio-economic differences in the perceived quality of high and low-paid jobs in Greece", Economic Bulletin of the Bank of Greece, Vol. 24, pp. 91-132.
49. Pouliakas, K. and Theodossiou, I. (2005b), "Socio-economic differences in the perceived quality of high and low-paid jobs in Europe", working paper, University of Aberdeen, Aberdeen.
50. Prendergast, C. (1999), "The provision of incentives in firms", Journal of Economic Literature, Vol. 37 No. 1, pp. 7-63.
51. Seiler, E. (1984), "Piece rate vs time-rate: the effect of incentives on earnings", The Review of Economics and Statistics, Vol. 66 No. 3, pp. 363-76.
52. Staiger, D. and Stock, J.H. (1997), "Instrumental variables regression with weak instruments", Econometrica, Vol. 65 No. 3, pp. 557-86.
53. Stock, J.H., Wright, J.H. and Yogo, M. (2002), "A survey of weak instruments and weak identification in generalized method of moments", Journal of Business and Economic Statistics, Vol. 20 No. 4, pp. 518-29.
54. Sloane, P.J. and Williams, H. (1996), "Are overpaid workers really unhappy? A test of the theory of cognitive dissonance", Labour, Vol. 10, pp. 3-15.
55. Theodossiou, I. (1998), "The effects of low-pay and unemployment on psychological well-being: a logistic regression approach", Journal of Health Economics, Vol. 17, pp. 85-104.
56. Van Praag, B.M.S. (1991), "Ordinal and cardinal utility: an integration of the two dimensions of the welfare concept", Journal of Econometrics, Vol. 50, pp. 69-89.
57. Wooldridge, J.M. (2002), Econometric Analysis of Cross Section and Panel Data, MIT Press, Cambridge, MA.