Performance pay, working hours, and health‐related absenteeism

Analysis of broad, U.K. worker‐establishment matched panel data from 2004 to 2011 reveals that working hours increase with the fraction of an establishment's workers receiving performance‐based pay, if the cutoff for “long weekly hours” is from 35 to 39, but not beyond a sharp discontinuity at 40. Long hours are found to be unrelated to various workplace health problems but positively related to health‐related absenteeism. Combined with complementary research on hours and productivity, the results suggest that the well‐known productivity enhancements from performance pay are dampened by exhaustion‐induced absenteeism stemming from additional working hours and higher per‐hour work intensity.