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dc.contributor.authorHallock, Kevin F.
dc.contributor.authorOlson, Craig A.
dc.date.accessioned2020-11-17T16:58:20Z
dc.date.available2020-11-17T16:58:20Z
dc.date.issued2009-02-27
dc.identifier.other921135
dc.identifier.urihttps://hdl.handle.net/1813/74754
dc.description.abstractWho chooses what type of pay? The costs and benefits of “flexible” and “cafeteria-style” benefit plans have been discussed for some time. Additionally, many papers have considered the potential costs and benefits of certain types of pay plans (e.g. salaries versus piece rates). In this paper, we use detailed data from a specific firm that annually set the total compensation level for each of its employees but then did something extremely unusual. At the start of each pay year, the firm set an exchange rate for the dollar trade-off between cash pay and stock option pay. It then gave every employee nearly complete choice over the fraction of their pay that was contingent (stock options, bonus) versus guaranteed (salary). There are several empirical findings. There is substantial variation in the choice of contingent pay with some workers choosing almost all base pay and others choosing almost entirely stock options. Younger employees, more experienced employees, higher paid employees, and male employees are more likely to allocate a larger fraction of their total compensation to at-risk alternatives. The robustness of these results varies somewhat depending on the empirical specification and set of covariates used.
dc.language.isoen_US
dc.rightsRequired Publisher Statement: Copyright is held by the authors.
dc.subjectearnings
dc.subjectcontingent pay
dc.subjectguaranteed pay
dc.subjectcompensation
dc.subjectemployee choice
dc.titleEmployees’ Choice of Method of Pay
dc.typearticle
dc.description.legacydownloadsHallock39_employees_choice_method_of_pay.pdf: 2145 downloads, before Oct. 1, 2020.
local.authorAffiliationHallock, Kevin F.: kfh7@cornell.edu Cornell University ILR School
local.authorAffiliationOlson, Craig A.: University of Illinois at Urbana-Champaign


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