What is it about?
This paper uses an experimental setting to examine the effects of performance-related pay on stress as measured by salivary cortisol. We find a significant increase in cortisol when subjects are paid for their performance. While a small study, it suggests that firms may need to worry about the health effects of how workers are paid.
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Why is it important?
Lost workdays due to stress are on the increase in most developed economies. In addition, the direct linking of pay to performance is also on the increase. While previous research based on survey data shows a linkage, those studies can never quite pin down the direction of causation. This experimental structure shows a direct and causal linkage of performance pay causing a physiological increase in stress.
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This page is a summary of: Performance pay and low-grade stress: An experimental study, Work, November 2020, IOS Press, DOI: 10.3233/wor-203294.
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