Performance pay and work hours: US survey evidence.

This article investigates the relationship between performance pay—defined as compensation tied to individual output such as tips, commissions, bonuses, and incentive pay, excluding profit sharing—and the number of hours worked by U.S. employees using data from the National Longitudinal Survey of Youth. The findings indicate that workers receiving performance pay work significantly longer hours, including a higher likelihood of working over 45 or 50 hours per week, even after controlling for individual and employer fixed effects to account for sorting and unobserved heterogeneity. Disaggregated analyses reveal that all types of performance pay except tips are associated with increased hours, and the share of compensation from performance pay generally correlates with longer hours. Occupational differences show that while managers are most likely to receive performance pay and work long hours, their increased hours largely reflect sorting rather than behavioral changes, whereas non-managerial white-collar and blue-collar workers exhibit stronger behavioral responses to performance pay in terms of longer hours. These results suggest that extended work hours may be a mechanism linking performance pay to adverse health outcomes among U.S. workers, particularly outside managerial roles.