Performance Pay, Gender, and Divorce among Full-Time American Workers

This work examines the influence of receiving performance pay on the probability that a worker will divorce. Uniquely, it compares two different cohorts of the National Longitudinal Survey of Youth. Probit estimates show that, for men, receiving performance pay decreases the probability of divorce in the older cohort and has no impact in the younger cohort. The impact of performance pay for men in the older cohort is mediated by household income and there is no significant impact of performance pay after accounting for household income. For women, receiving performance pay increases the probability of divorce in the older cohort and has no impact in the younger cohort. In contrast to men, though both household income and wages act as mediators in the relationship between performance pay and divorce, women in the older cohort remain more likely to divorce even after accounting for household income and wages. JEL codes: J12, J33, M52