Do Women Respond Less to Performance Pay? Building Evidence from Multiple Experiments

Existing empirical work raises the hypothesis that performance pay—whatever its output gains—may widen the gender earnings gap because women may respond less to incentives. We evaluate this possibility by aggregating evidence from existing experiments on performance incentives with male and female subjects. Using a Bayesian hierarchical model, we estimate both the average effect and heterogeneity across studies. We find that the gender response difference is close to zero and heterogeneity across studies is small, while performance pay increases output by 0.36 standard deviations on average. The data thus support agency theory for men and women alike. (JEL C11, C90, J16, J31, J33)

Employer Responses to Legislation Protecting Non-Regular Workers: Evidence from South Korea

Many countries have taken steps to address employment insecurity by enacting employment protection legislation (EPL) for non-regular workers. Although the aggregate impacts of EPL reforms have been examined in the literature, less attention has been paid to the heterogeneous ways that different types of employers respond to these reforms. In this paper, we seek to shed additional light on the impact of non-regular workforce protections by investigating the response of establishments to legal changes in Korea in 2007. We employ a difference-in-difference framework to explore which establishment characteristics predict that employers will convert non-regular workers to regular status. Results indicate that, in the short term, the Korean labor reforms led to increased conversions of fixed-term workers to permanent status. Establishments that have shifted risk onto workers via the use of performance pay are more likely to extend permanent status to non-regular workers. However, establishments that provide favorable employment conditions were less likely to convert. Unions play a double-edged role. Unions in large establishments with a wide range of occupational categories are associated with relatively greater conversion of outsiders to regular status, while unions in smaller, more resource-constrained establishments with a narrower occupational focus are associated with more exclusionary behavior.

Performance Pay in Insurance Markets: Evidence from Medicare

Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of highrated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.

Union Reform, Performance Pay, and New Teacher Supply: Evidence from Wisconsin's Act 10

This study examines the impact of performance pay on teacher selection. I exploit a shift toward performance pay in Wisconsin induced by the enactment of Act 10, which gave school districts autonomy to redesign their compensation schemes. Following the law, half of Wisconsin school districts eliminated salary schedules and started negotiating pay with individual teachers based on performance. Comparing the quantity of teaching degrees in Wisconsin institutions before and after Act 10, and relative to those in similar states, I find that Act 10 led to a 20 percent increase in teaching degrees. This effect was entirely driven by selective universities.

Paying for Whose Performance? Teacher Incentive Pay and the Black–White Test Score Gap

Teacher performance pay is often introduced with the goal of reducing gaps in test scores across groups, yet little is known about how well they achieve this aim. We ask, “Do test score-based teacher incentives impact the Black–White test score gap?” Using student–teacher matched data and a difference-in-differences approach in which the performance of a teacher’s students before and after the policy is compared, we find that performance pay increases the conditional Black–White gap. The effect is particularly evident when bonuses are large, consistent with a causal response to performance pay.