What is it about?
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 .
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Why is it important?
The rise in performance related pay jobs have the unintended consequence of harming health - particularly for those in these kinds of jobs for a long time.
Perspectives
This is the first paper using nationally representative data to examine the longer run relationship between performance pay and health.
Professor Keith A Bender
University of Aberdeen
Read the Original
This page is a summary of: The unintended consequences of the rat race: the detrimental effects of performance pay on health, Oxford Economic Papers, September 2013, Oxford University Press (OUP),
DOI: 10.1093/oep/gpt032.
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