Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34709 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 2850
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We document that an increasing fraction of jobs in the U.S. labor market explicitly pay workers for their performance using bonuses, commissions, or piece-rates. We find that compensation in performance-pay jobs is more closely tied to both observed (by the econometrician) and unobserved productive characteristics of workers. Moreover, the growing incidence of performance-pay can explain 24 percent of the growth in the variance of male wages between the late 1970s and the early 1990s, and accounts for nearly all of the top-end growth in wage dispersion (above the 80th percentile).
Document Type: 
Working Paper

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