Publications
Does performance pay increase the risk of marital instability?, Review of Economics of the Household, Forthcoming (with John S. Heywood and Uwe Jirjahn).
Abstract: This study is the first to systematically examine the association between performance pay and marital instability. Using German survey data on married couples and including an extensive set of controls, we show that performance pay is associated with an increased probability of subsequent separation or divorce. Yet, the results are entirely gender specific. When husbands earn performance pay, no association with marital instability is found. When wives earn performance pay, the association is large and robust. This pattern persists across a variety of modeling choices and holds in instrumental variable estimations accounting for the endogeneity of performance pay. We argue that the pattern fits theoretical expectations and discuss the implications.
Worker Stress and Performance Pay: German Survey Evidence, Journal of Economic Behaviour and Organization, Vol. 201, 2022, pp. 276-291 (with John S. Heywood and Uwe Jirjahn).
Abstract: While performance pay can benefit firms and workers by increasing productivity and wages, it has also been associated with a deterioration of worker health. The transmission mechanisms for this deterioration remain in doubt. We examine the hypothesis that increased stress is one transmission mechanism. Using unique survey data from the German Socio-Economic Panel, we find performance pay consistently and importantly associates with greater stress even controlling for a long list of economic, social and personality characteristics. The finding also holds in instrumental variable estimations accounting for the potential endogeneity of performance pay. Moreover, we show that risk tolerance and locus of control moderate the relationship between performance pay and stress. Among workers receiving performance pay, the risk tolerant and those believing they can control their environment suffer to a lesser degree from stress.
Performance Pay and Alcohol Use in Germany, Industrial Relations: A Journal of Economy and Society, Vol. 61, 2022, pp. 353-383 (with John S. Heywood and Uwe Jirjahn).
Abstract: Previous studies show that performance pay can benefit firms and workers by increasing productivity and wages. Yet, performance pay can also have unintended consequences for worker health. Using data from the German Socio-Economic Panel, we examine the hypothesis that alcohol use as “self-medication” is a natural response to the stress and uncertainty associated with performance pay. We find that the likelihood of consuming each of four types of alcohol (beer, wine, spirits, and mixed drinks) is higher for those receiving performance pay even controlling for a long list of economic, social, and personality characteristics and in sensible instrumental variable estimates. We also show that the number of types of alcohol consumed is larger for those receiving performance pay and that the intensity of consumption increases.