Income inequality has been increasing in many countries across the globe. This trend is reflected in organizational pay structures as well, as the ratio of CEO pay to median worker pay has risen from 59-to-1 in 1989 to 399-to-1 in 2021. Such vertical pay dispersion offers performance benefits under certain conditions, consistent with tournament theory predictions.

Drawing on the allostatic load model, Prof Sayre demonstrates that higher dispersion also has important health costs in terms of more physical symptoms, negative affect, and emotional exhaustion. Performance pressure is identified as a key mechanism explaining both the performance gains and health costs of vertical pay dispersion.

Prof Sayre’s is an Assistant Professor of Organizational Behavior at the EM Lyon Business School (France). He received his PhD in Industrial/Organizational Psychology from Pennsylvania State University (USA) .