The Relation Between Performance Pay and Job Satisfaction

We set out to investigate the relationship between receiving performance pay and job satisfaction. Our model is based on the model used by Green and Heywood (2007), and looks to extend it to include gender and racial differences. Our main results show that PRP schemes are positively associated with some aspects of job satisfaction (Pay and job security), but are negatively associated with satisfaction with the work itself. Our gender results show the same relations, but when looking at the marginal effects we see that women react more strongly to receiving a bonus or PRP. Racial differences are hard to determine, due to a lack of observations.