Community Research and Development Information Service - CORDIS


Pay Inequalities and Economic Performance, Final Project report

Project ID: HPSE-CT-1999-00040


In the original submission we proposed to look at the relationship between pay inequalities and business and employment performance, and to focus our analysis on performance at the detailed industry and company level rather than the national level. Rewards play a central part in firms� performance management systems, and they also influence the employment costs of different categories of workers and so affect job openings. Thus firms� behaviour has been at the centre of our work. Our principal questions were:
a) whether large pay inequalities in themselves are sufficient to generate good business performance and employment performance, as competitive economic theory would predict; and
b) how far the exceptions to this view, in which small inequalities coexist with good performance, can be explained by reference to different approaches to performance management within firms and the way firms manage their industrial relations?

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