Performance pay and unemployment during the great recession

- Individuals in performance pay jobs are less likely to be unemployed.
- There is little evidence that this association was any weaker during the 2008 recession.
- Results are similar if one separates bonus pay from other forms of performance pay.

With data from the Panel Study of Income Dynamics I show that individuals in performance pay jobs were much less likely to be unemployed at the time of the interview than those in “fixed” wage jobs during the 2008 recession. While their unemployment rate is always lower in non-recession years, there is little evidence that this association was any weaker during the recession. Additional evidence shows that performance pay has a similar effect on the incidence of layoffs vs quits in both non-recession and recession years.