Employment Contracts and Stress: Experimental Evidence

Julia Allan, Nicole Andelic* (Corresponding Author), Keith Bender, Daniel Powell, Sandro Stoffel, Ioannis Theodossiou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


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.
Original languageEnglish
Pages (from-to)360-373
Number of pages14
JournalJournal of Economic Behavior and Organization
Early online date21 May 2021
Publication statusPublished - 31 Jul 2021


  • perfomance- related pay
  • stress
  • experiment
  • cortisol


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