Arbeitspapier

Do firms pay bonuses to protect jobs?

A large share of workers receives bonus payments besides their base wage. The benefits of flexible wage components in remuneration are twofold: they can incentivize workers and make it easier to adjust wages downward in response to negative shocks. Using data on bonus payments of Hungarian workers from linked employer-employee data, I disentangle the importance of these two factors to assess their respective importance. First, I show that bonus payments flexibly adjust to the revenue shocks of firms. At the same time, the separation rate of workers without bonuses do not react more to revenue changes than the separation rate of workers with bonuses. Bonus paying firms are shown to be financially more stable, larger and more productive, and they have less volatile revenue than firms not paying bonuses. These facts are consistent with a wage posting model with incentive contracting, but they are hard to reconcile with models emphasizing the role of bonus payments in alleviating wage rigidity. These results indicate that wage flexibility regulations may not affect the employment responses of firms to negative shocks.

ISBN
978-615-5594-46-5
Sprache
Englisch

Erschienen in
Series: IEHAS Discussion Papers ; No. MT-DP - 2016/12

Klassifikation
Wirtschaft
Wage Level and Structure; Wage Differentials
Labor Demand
Monopsony; Segmented Labor Markets
Thema
Wage Level and Wage Structure
Labor Demand
Monopsony

Ereignis
Geistige Schöpfung
(wer)
Reizer, Balázs
Ereignis
Veröffentlichung
(wer)
Hungarian Academy of Sciences, Institute of Economics
(wo)
Budapest
(wann)
2016

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Reizer, Balázs
  • Hungarian Academy of Sciences, Institute of Economics

Entstanden

  • 2016

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