- Home
- Publications
- How Much Performance Pay Is There In The Public Sector And What Are Its Effects?
How much performance pay is there in the public sector and what are its effects?
Related Themes
Labour, Employment and WagesJournal
Human Resource Management Journal, Vol. 27
External Resources
https://onlinelibrary.wiley.com/doi/abs/10.1111/1748-8583.12153
Issue
4
Theory suggests that performance pay (PP) can align employees' interests with those of the employer and attract high‐ability workers and incentivise effort but that it may be less effective in the public sector. However, empirical evidence on its incidence and effects is largely confined to the private sector. We find that half the 20 percentage point gap in PP incidence in Britain between the public and private sectors is accounted for by differences in occupational composition. The gap falls to 8 percentage points when ‘matching’ employees in both sectors on their demographic and job characteristics. PP is linked to positive job attitudes among private sector employees, but not among observationally equivalent public sector employees. Furthermore, PP is negatively correlated with workplace performance in the public sector. These findings raise important questions about public policies promoting PP in the public sector.
Related Blog Posts
Breaking Down the Different Types of Pension in the UK
Robyn Smith
Adrian Pabst
25 Mar 2024
6 min read
What Are the Implications of the Rising National Minimum Wage and National Living Wage Rates?
Ekaterina Aleynikova
Adrian Pabst
19 Mar 2024
5 min read
How Changes in Migration Policy Could Boost Scotland’s Economy
Max Mosley
Ekaterina Aleynikova
18 Dec 2023
3 min read
Related Projects
Related News
Press Release: Compositional effects push up average weekly earnings at the end of 2020
26 Jan 2021
2 min read
Press Release: 2020 shaping up to be the worst year for total pay growth since 2009
15 Dec 2020
2 min read
Related Publications
Pay-Setting Among Employers in the Agriculture, Cleaning, Hospitality and Retail Sectors
11 Mar 2024
Research Report
Job Boom or Job Bust? The Effect of the Pandemic on Actual and Measured Job and Employment Growth
07 Feb 2024
UK Economic Outlook Box Analysis
Kurzarbeit/Short Time Working: Experiences and Lessons from the Covid-Induced Downturn
20 Nov 2023
National Institute Economic Review