Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107524
Authors: 
Bryson, Alex
Clark, Andrew E.
Freeman, Richard B.
Green, Colin P.
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8724
Abstract: 
We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual performance-related pay, we here demonstrate a robust positive link between the receipt of a range of group performance schemes (profit shares, group bonuses and share ownership) and job satisfaction. Critically, this relationship remains after conditioning on wage levels, which suggests these pay methods provide utility to workers in addition to that through higher wages. These findings survive a variety of methods aimed at accounting for unobserved individual and job-specific characteristics. We investigate two potential channels for this effect. We first demonstrate that half of the positive effect can be accounted for by employees' tendency to reciprocate in return for the "gift" of share capitalism. Second, we show that these 'share capitalist' modes of pay dampen the negative wellbeing effects of what we typically think of as "bad" aspects of job quality. Finally, share-capitalist pay methods also have positive wellbeing spill-over effects on co-workers.
Subjects: 
compensation methods
wages
job satisfaction
working conditions
JEL: 
J28
J33
J54
J63
J81
M52
Document Type: 
Working Paper

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