An article co-authored by Derek Jones, the Irma M. and Robert D. Morris Professor of Economics, was recently published in The International Journal of Human Resource Management.
“The differing effects of individual and group incentive pay on worker separation: evidence using Finnish panel data” presents the results of a study about the role of individual incentive and group incentive pay as determinants of worker separation.
Jones and his co-authors, Panu Kalmi of Finland’s University of Vaasa, Takao Kato of Colgate University, and Mikko Mäkinen of the Bank of Finland, used data from 1997 to 2006. They found that for white-collar workers at large firms, group incentive pay significantly increased the probability of separation, showing diminished employment stability.
Their research also showed that for blue-collar workers at both large and small firms, individual incentive pay was associated with a decreased probability of separation, or enhanced employment stability.
The group said that these results “suggest that outcomes depend on the differing institutional contexts found in coordinated market economies (such as Finland) and liberal market economies.”