Contracts, pay and performance in the sport of kings: Evidence from horse racing

A considerable body of evidence shows that performance-related pay schemes can raise worker productivity with much this increase due to sorting. However, variations in the power contracts are rarely observed. The thoroughbred horse racing industry offers such an opportunity. Contrary earlier research, we find no shirking when incentive is reduced through jockeys switching from complete into a salaried (retainer) contract. Moreover, salary result legacy effects superior performance continuing for elite even after their agreements have expired. We argue reduction monitoring costs.