Fixed wages or productivity pay: Evidence from 15 EU countries

A simple model of the firms' decision to pay workers productivity related p ay is tested using individual worker level data from 15 EU member states. W e find empirical support for the key hypotheses of Lazear type PRP models w hich relate to firm size and permanence of employment. Other issues such as the organisation of production and the nature of the product or service we re found to be very peripheral to the use of PRP systems across countries.