# **Contents**

|1. Introduction .......................................................................................................................................... 1|
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|2. Theoretical debates ............................................................................................................................... 4|
|Expectancy and reinforcement theory ............................................................................................ 4|
|Incentive and principal-agent theory .............................................................................................. 5|
|Behavioral economics —intrinsic versus extrinsic motivation ...................................................... 7|
|3. Organizing the empirical evidence: ―Craft‖ and ―Coping‖ jobs ........................................................... 9|
|Methodological approaches .......................................................................................................... 11|
|4. The empirical literature reviewed ....................................................................................................... 13|
|Observational studies ................................................................................................................... 13|
|Public sector coping jobs ....................................................................................................... 13|
|Public sector craft jobs ........................................................................................................... 14|
|_Tax administration, job placement ................................................................................... 14_|
|_Teaching............................................................................................................................ 16_|
|_Health care jobs ................................................................................................................ 17_|
|Private sector: Craft or coping jobs ....................................................................................... 19|
|Experimental studies .................................................................................................................... 21|
|Meta-studies ........................................................................................................................... 21|
|Laboratory experiments ......................................................................................................... 22|
|Public sector craft jobs ........................................................................................................... 23|
|_Tax administration, job placement ................................................................................... 23_|
|_Teaching............................................................................................................................ 24_|
|_Health sector ..................................................................................................................... 25_|
|Private sector: Craft or coping jobs ....................................................................................... 26|
|5. Assessing the evidence ....................................................................................................................... 26|
|6. Summary ............................................................................................................................................. 28|
|Appendix A: List of empirical PRP studies reviewed ............................................................................ 33|
|Appendix B: List of High Quality Studies of Craft and Coping Jobs .................................................... 37|
|References .............................................................................................................................................. 40|

|**Figures**|
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|Figure 1: Aggregate findings on performance-related pay........................................................ 27|
|Figure 2: Findings by internal and external validity............................................................... 27|
|Figure 3: Findings by job type........................................................................................ 28|
|Figure 4: Findings for craft and coping tasks by research quality and country context....................... 29|

|**Tables**|
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|Table 1: James Q. Wilson‘s classification of job type ................................................................................ 11|
|Table 2: Studies by country environment, methodology, and job type....................................................... 13|
|<br>Table 3: Findings of high quality craft and coping studies by sector and country context ......................... 29|

# **Boxes**

|Box 1: The elements of pay flexibility.......................................................................................................... 3|
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