Don't forget the gravy! : are bonuses and time rates complements?

Green, Colin and Heywood, John (2016) Don't forget the gravy! : are bonuses and time rates complements? Industrial Relations, 55 (3). pp. 490-513. ISSN 1468-232X

[thumbnail of Bonus and Salary IR Final Submission]
PDF (Bonus and Salary IR Final Submission)
Bonus_and_Salary_IR_Final_Submission.pdf - Accepted Version
Available under License Creative Commons Attribution-NonCommercial.

Download (328kB)


The press often depicts bonuses as extra payments to the already well compensated and calls for reform. Yet, these calls typically ignore the efficiency argument that bonuses are potentially risky performance pay that substitute for salary compensation. This paper uses representative UK data to estimate that bonuses appear not to substitute for salary in cross-sectional estimates. Yet, when controlling for time invariant characteristics in panel data, bonuses emerge as partial substitutes. Each pound of bonus comes at a cost of 40 pence in other earnings. The degree of substitution is far larger at the bottom of the earnings distribution and far smaller at the top of the earnings distribution where, indeed, bonuses look more like gravy.

Item Type:
Journal Article
Journal or Publication Title:
Industrial Relations
Additional Information:
This is the peer reviewed version of the following article: Green, C. P. and Heywood, J. S. (2016), Don't Forget the Gravy! Are Bonuses Just Added on Top of Salaries?. Industrial Relations: A Journal of Economy and Society, 55: 490–513. doi: 10.1111/irel.12147 which has been published in final form at This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Uncontrolled Keywords:
?? bonus paymentsperformance paycomplementsorganizational behavior and human resource managementstrategy and managementindustrial relationsmanagement of technology and innovation ??
ID Code:
Deposited By:
Deposited On:
18 Jun 2015 05:37
Last Modified:
17 Dec 2023 01:29