Abstract[Excerpt] Using data from the 1992-95 Multi-City Study of Urban Inequality, an employer survey, the authors document a new empirical finding that workers are less likely to receive promotions in nonprofit organizations than in for-profit firms. The study also uncovers evidence that wage increases associated with promotion were of comparable magnitudes in the two sectors, as was the potential for within-job wage growth; nonprofits were less likely than for-profits to base promotions on job performance or merit; nonprofits were less likely to use output-contingent incentive contracts to motivate workers; and the observed difference in promotion rates between the nonprofit and for-profit sectors was more pronounced for highskilled than for low-skilled workers. The authors also propose a theory, based on the idea that nonprofit workers are intrinsically motivated to a greater extent than are for-profit workers, that potentially explains the broad pattern of evidence they uncover. Required Publisher StatementCopyright by Cornell University.This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/articles/112 Review, Vol. 60, No. 3 (April 2007). © by Cornell University. 311 A Industrial and Labor Relations0019-7939/00/6003 $01.00 PROMOTIONS AND INCENTIVES IN NONPROFIT AND FOR-PROFIT ORGANIZATIONSJED DEVARO and DANA BROOKSHIRE* Using data from the 1992-95 Multi-City Study of Urban Inequality, an employer survey, the authors document a new empirical finding that workers are less likely to receive promotions in nonprofit organizations than in for-profit firms. The study also uncovers evidence that wage increases associated with promotion were of comparable magnitudes in the two sectors, as was the potential for within-job wage growth; nonprofits were less likely than for-profits to base promotions on job performance or merit; nonprofits were less likely to use output-contingent incentive contracts to motivate workers; and the observed difference in promotion rates between the nonprofit and for-profit sectors was more pronounced for high-skilled than for low-skilled workers. The authors also propose a theory, based on the idea that nonprofit workers are intrinsically motivated to a greater extent than are for-profit workers, that potentially explains the broad pattern of evidence they uncover. *Jed DeVaro is Assistant Professor of Labor Economics in the School of Industrial and Labor Relations atCornell University, and Dana Brookshire is an assistant vice president at Bank of America. The authors are grateful for helpful comments from Francine Blau, Ronald Ehrenberg, Martin Farnham, Limor Golan, Jeffrey Groen, Kevin Hallock, Robert Smith, Michael Waldman, and seminar participants at the Society of Labor Economists Annual Meetings, the NBER Summer Institute, and Wesleyan University. They also thank Jason Roche, David Rosenblum and Robert Sullivan for research assistance.The data used in this study can be downloaded from the ICPSR website. Results that are mentioned but not reported i...
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