Performance pay and job satisfaction

John S. HEYWOOD, Xiangdong WEI

Research output: Journal PublicationsJournal Article (refereed)peer-review

55 Citations (Scopus)


This article estimates the direct effect of performance pay schemes on job satisfaction for a representative sample of US workers. Both individual performance pay and profit sharing are routinely associated with higher satisfaction even as the level of pay and a long list of other determinants are held constant. This result holds in panel estimates designed to control for fixed effects. When individual performance pay is disaggregated into five specific schemes, all but one associate with higher satisfaction and piece rates associate with lower satisfaction. The role of gender is explored as an explanation for the results.
Original languageEnglish
Pages (from-to)523-540
Number of pages18
JournalJournal of Industrial Relations
Issue number4
Publication statusPublished - 1 Sept 2006


  • job satisfation
  • ordered probit
  • performance pay
  • piece rates

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