Employment Contracts and Stress: Experimental Evidence

Arbeitspapier

A growing literature has found a link between performance-related pay (PRP) and poor health, but the causal direction of the relationship is not known. To address this gap, the current paper utilises a crossover experimental design to randomly allocate subjects into a work task paid either by performance or a fixed payment. Stress is measured through self-reporting and salivary cortisol. The study finds that PRP subjects had significantly higher cortisol levels and self-rated stress than those receiving fixed pay, ceteris paribus. By circumventing issues of self-report and self-selection, these results provide novel evidence for the detrimental effect PRP may have on health.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GLO Discussion Paper ; No. 838

Classification and Topics

• Classification: Wirtschaft ; Compensation Packages; Payment Methods ; Design of Experiments: Laboratory, Individual
• Subject: performance-related pay ; stress ; experiment ; cortisol

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Allan, Julia L. ; Andelic, Nicole ; Bender, Keith A. ; Powell, Daniel ; Stoffel, Sandro ; Theodossiou, Ioannis
• Event: Veröffentlichung
• (who): Global Labor Organization (GLO)
• (where): Essen
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/233876
• Last update: 10.03.2025, 11:43 AM CET