Has Performance Pay Increased Wage Inequality in Britain?

48 Pages Posted: 27 Apr 2015

See all articles by Mark L. Bryan

Mark L. Bryan

University of Essex - Institute for Social and Economic Research (ISER)

Alex Bryson

UCL ; National Institute of Economic and Social Research (NIESR)

Abstract

Using data from the British Household Panel Survey (BHPS) we show performance pay (PP) increased earnings dispersion among men and women, and to a lesser extent among full-time working women, in the decade of economic growth which ended with the recession of 2008. PP was also associated with some compression in the lower half of the wage distribution for women. The effects were predominantly associated with a broad measure of PP that included bonuses. However, these effects were modest and there is no indication that PP became increasingly prevalent, as some had predicted, over the decade prior to recession.

Keywords: wages, wage inequality, performance pay, bonuses

JEL Classification: J31, J33

Suggested Citation

Bryan, Mark L. and Bryson, Alex, Has Performance Pay Increased Wage Inequality in Britain?. IZA Discussion Paper No. 8995, Available at SSRN: https://ssrn.com/abstract=2598935

Mark L. Bryan (Contact Author)

University of Essex - Institute for Social and Economic Research (ISER) ( email )

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Alex Bryson

UCL ( email )

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HOME PAGE: http://https://iris.ucl.ac.uk/iris/browse/profile?upi=ABRYS65

National Institute of Economic and Social Research (NIESR) ( email )

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HOME PAGE: http://www.niesr.ac.uk/staff/staffdetail.php?StaffID=307

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