Abstract[Excerpt] Using a large sample of establishments drawn from the Multi-City Study of Urban Inequality (MCSUI) employer survey, we study gender differences in promotion rates and in the wage gains attached to promotions. Several unique features of our data distinguish our analysis from the previous literature on this topic. First, we have information on the wage increases attached to promotions, and relatively few studies on gender differences have considered promotions and wage increases together. Second, our data include jobspecific worker performance ratings, allowing us to control for performance and ability more precisely than through commonly-used skill indicators such as educational attainment or tenure. Third, in addition to standard information on occupation and industry, we have data on a number of other firm characteristics, enabling us to control for these variables while still relying on a broad, representative sample, as opposed to a single firm or a similarly narrowly-defined population. Our results indicate that women have lower probabilities of promotion and expected promotion than do men but that there is essentially no gender difference in wage growth with or without promotions. ABSTRACTUsing a large sample of establishments drawn from the Multi-City Study of Urban Inequality (MCSUI) employer survey, we study gender differences in promotion rates and in the wage gains attached to promotions. Several unique features of our data distinguish our analysis from the previous literature on this topic. First, we have information on the wage increases attached to promotions, and relatively few studies on gender differences have considered promotions and wage increases together. Second, our data include job-specific worker performance ratings, allowing us to control for performance and ability more precisely than through commonly-used skill indicators such as educational attainment or tenure. Third, in addition to standard information on occupation and industry, we have data on a number of other firm characteristics, enabling us to control for these variables while still relying on a broad, representative sample, as opposed to a single firm or a similarly narrowly-defined population. Our results indicate that women have lower probabilities of promotion and expected promotion than do men but that there is essentially no gender difference in wage growth with or without promotions.

Abstract[Excerpt] An extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions, and then investigate the validity of these predictions using a longitudinal data set that contains detailed information concerning the internallabor-market history of a medium-sized firm in the financial-services industry. Our results support the notion that signaling is both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the role of education as a labor-market signal. ABSTRACTAn extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions, and then investigate the validity of these predictions using a longitudinal data set that contains detailed information concerning the internal-labor-market history of a medium-sized firm in the financial-services industry. Our results support the notion that signaling is both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the role of education as a labor-market signal.

Abstract[Excerpt] In this analysis I study promotion schemes as human resource management strategies by which the firm can realize strategic goals by motivating workers to higher levels of effort and performance. Using information on promotions, wages, and performance for professional workers in a cross section of establishments in four metropolitan areas of the U.S., I investigate empirically the proposition that firms strategically organize promotion tournaments to motivate workers to higher levels of performance. I present evidence suggesting that relative performance of workers determines promotions, supporting the notion of internal promotion competitions in which internal hiring policies and fixed job slots combine to create competitions among workers of a given rank in a firm. I then estimate a structural model of promotion tournaments that simultaneously accounts for worker and firm behavior and how the interaction of these behaviors gives rise to promotions. The results are consistent with the prediction of tournament theory that workers are motivated by larger spreads. AbstractIn this analysis I study promotion schemes as human resource management strategies by which the firm can realize strategic goals by motivating workers to higher levels of effort and performance. Using information on promotions, wages, and performance for professional workers in a cross section of establishments in four metropolitan areas of the U.S., I investigate empirically the proposition that firms strategically organize promotion tournaments to motivate workers to higher levels of performance. I present evidence suggesting that relative performance of workers determines promotions, supporting the notion of internal promotion competitions in which internal hiring policies and fixed job slots combine to create competitions among workers of a given rank in a firm. I then estimate a structural model of promotion tournaments that simultaneously accounts for worker and firm behavior and how the interaction of these behaviors gives rise to promotions. The results are consistent with the prediction of tournament theory that workers are motivated by larger spreads.* I have benefited considerably from discussions of this work with numerous colleagues. The comments of Chris Collins, Daniel Simon, the editor, and an anonymous referee were particularly helpful. David Rosenblum provided outstanding research assistance.

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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