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Title:Higher and higher? Performance pay and wage inequality in Germany PDF Logo
Authors:Sommerfeld, Katrin
Issue Date:2012
Series/Report no.:SOEPpapers on Multidisciplinary Panel Data Research 476
Abstract:Performance pay is of growing importance to the wage structure as it applies to a rising share of employees. At the same time wage dispersion is growing continuously. This leads to the question of how the growing use of performance pay schemes is related to the increase in wage inequality? German SOEP data for the years 1984 to 2009 confirm the large increase in the application of performance pay schemes. This in turn led to an upward shift of the wage distribution by about one log point. However, it did not contribute to the growth in wage inequality. Even though wage inequality grew within the group of employees who receive performance pay, it grew even more so within the group who do not receive it. Still, the wage difference between both wage schemes remained flat over the distribution. The empirical analysis employs sequential decompositions in a quantile regression framework.
Subjects:performance pay
wage structure
quantile regression
sequential decomposition
JEL:J31
J33
C21
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
SOEPpapers on Multidisciplinary Panel Data Research, DIW

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