Pay for performance and wage inequality

Lemieux, MacLeod, and Parent get to the point:

We document that an increasing fraction of jobs in the U.S. labor
market explicitly pay workers for their performance using bonuses,
commissions, or piece-rates.  We find that compensation in
performance-pay jobs is more closely tied to both observed (by the
econometrician) and unobserved productive characteristics of workers. 
Moreover, the growing incidence of performance-pay can explain 24
percent of the growth in the variance of male wages between the late
1970s and the early 1990s, and accounts for nearly all of the top-end
growth in wage dispersion (above the 80th percentile).

Here is the link, here is a non-gated version.  It is perhaps simplistic to say the people at the top now earn more because they can, but simplistic is not the same as wrong.  For me the puzzle is why the world held back so much on bonus pay for so long. 


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