Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330828 
Year of Publication: 
2025
Series/Report no.: 
GLO Discussion Paper No. 1687
Publisher: 
Global Labor Organization (GLO), Essen
Abstract: 
Using German survey data, we estimate the determinants of employee quits examining the roles of performance appraisal and performance pay. We show that employees subject to performance appraisals are less likely to quit. Yet, this influence depends upon the financial consequences that flow from the appraisals. If there are no financial consequences or if the consequences are short term such as under piece rates, commissions or bonuses, quits are lower. If there are only long-term consequences such as permanent changes in base pay or promotion, there is no reduction in quits. We explore this difference suggesting that the long-term consequences create rigidity while the procyclical nature of short-run performance pay creates flexibility.
Subjects: 
Performance Appraisal
Performance Pay
Voluntary Job Quits
German Socio-Economic Panel
JEL: 
C23
M50
M52
Document Type: 
Working Paper

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