Worker separation under performance pay : Empirical evidence from Finland
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Title:
|
Worker separation under performance pay : Empirical evidence from Finland |
ISBN:
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978-952-323-193-1 |
Author:
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Jones, Derek C.
;
Kalmi, Panu
;
Kato, Takao
;
Mäkinen, Mikko
|
Organization:
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Bank of Finland
|
Series:
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Bank of Finland Research Discussion Papers
|
ISSN:
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1456-6184
|
Series number:
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33/2017 |
Year of publication:
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2017 |
Publication date:
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19.10.2017 |
Published in:
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Published "online first" 2019 in the International Journal of Human Resource Management as "The Differing Effects of Individual and Group Incentive Pay on Worker Separation: Evidence using Finnish Panel Data".
https://doi.org/10.1080/09585192.2019.1691624 |
Pages:
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39 |
Subject (yso):
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palkkiot; kannustimet; irtisanominen; työntekijät; tasa-arvo; työvoiman liikkuvuus
|
Keywords:
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Suomi
|
JEL:
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J33; M52; J31; J62; J63
|
Other keywords:
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performance pay; worker separation; job mobility; earnings inequality
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Abstract:
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This paper investigates the role of individual incentive (II) and group incentive (GI) pay as determinants of worker separation. We use a large linked employer-employee panel data set for full-time male manufacturing workers during 1997-2006 from Finland. We follow actual job spells and switches of individual employees and define separation as worker exit from his current employer. The key finding for white-collar workers is that group incentive pay is associated significantly with increased probability of separation and hence diminished employment stability, but in large firms only. For blue-collar workers our results consistently indicate that individual incentive pay is associated with a decreased probability of separation and hence enhanced employment stability, both in small and large firms. Our finding that group incentive pay increases the risk of separation for white-collar workers is more consistent with theoretical work such as Lazear (2000) and Fehr and Gaechter (2000), while uncovering that individual incentive pay decreases employment stability for blue-collar workers supports theoretical work such as Parent (1999) and Paarsch and Shearer (2000). |
Rights:
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https://helda.helsinki.fi/bof/copyright
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