Are Workers Rewarded for Inconsistent Performance?

Abstract

This paper examines whether workers are rewarded for inconsistent performances by salary premia. Some earlier research suggests that performance inconsistency leads to salary premia while other research finds premia for consistent performances. Using detailed salary and performance data, we find that inconsistency is rewarded for some dimensions of performance, specifically those where creativity is important and outcomes have higher variance. We find salary penalties for inconsistent performances in those dimensions that are basic requirements of successful team production.