Does deferred compensation increase worker effort?

Adams, Scott J. and Heywood, John (2011) Does deferred compensation increase worker effort? Manchester School, 79 (3). pp. 381-404. ISSN 1463-6786

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Abstract

This paper presents a model illustrating that deferred compensation increases effort (reduces shirking) by increasing the cost of job loss. Importantly, the size of this increase in effort shrinks as the chance of exogenous job separation grows. The paper tests the model's predictions using both US and Australian data. In both countries we find empirical results consistent with the model's predictions. Deferred compensation, as identified either by pensions or by steeper tenure–wage profiles, is associated with greater self-reported worker effort. Moreover, when the probability of job separation is greater, the influence of deferred compensation diminishes.

Item Type:
Journal Article
Journal or Publication Title:
Manchester School
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
64907
Deposited By:
Deposited On:
04 Jun 2013 15:08
Refereed?:
Yes
Published?:
Published
Last Modified:
01 Jan 2020 08:30