The unintended consequences of the rat race: the detrimental effects of performance pay on health

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Abstract

Although performance pay schemes have been linked to labour market productivity, one unintended consequence, suggested early by Adam Smith, is that performance pay is detrimental to health. Recent research has shown that there is a positive relationship between performance pay and injuries on the job. This article focusses on the consequences of performance pay on health and investigates if there is a link between performance pay and self-reported general health or specific illnesses. Using data from the British Household Panel Survey, this study uses survival analysis to show that being in jobs with a performance pay element increases the likelihood of health deterioration, ceteris paribus.
Original languageEnglish
Pages (from-to)824-847
Number of pages24
JournalOxford Economic Papers
Volume66
Issue number3
Early online date29 Sep 2013
DOIs
Publication statusPublished - Jul 2014

Keywords

  • performance related pay
  • health outcomes
  • duration model

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