Asymmetric employer information, promotions, and the wage policy of firms

Dato, Simon; Grunewald, Andreas; Kräkel, Matthias; Müller, Daniel

doi:10.1016/j.geb.2016.09.013

Cited by 17 publications

(9 citation statements)

References 65 publications

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“…The initial employer then must match competing wage offers to retain the worker. Thus, some workers who would be marginally more productive if promoted may be inefficiently denied promotions so that their employers can avoid the resulting costly wage increases. The findings by Dato, Grunewald, Kräkel, & Müller (2016), who conduct an experimental study to test Waldman's model, strongly support his results.…”

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confidence: 59%

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Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning

DeVaro

Gürtler

2020

Economics Manag Strategy

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In a multitask, market-based promotion tournament model, under different environments concerning employer learning about worker ability, it is shown that: (a) asymmetric learning in multitask jobs is a necessary condition for "strategic shirking" (i.e., underperforming on certain tasks to increase the promotion probability); (b) when learning becomes increasingly symmetric on one task, the effort allocated to that task could increase or decrease, but effort on the other task increases; (c) strategic shirking does not occur in equilibrium in single-task models; and (d) promotions signal worker ability even when there is symmetric learning on one task, if learning is asymmetric on another.

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confidence: 59%

“…The findings by Dato, Grunewald, Kräkel, & Müller (2016), who conduct an experimental study to test Waldman's model, strongly support his results.…”

mentioning

confidence: 59%

Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning

DeVaro

Gürtler

2020

Economics Manag Strategy

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“…See, for example, DeVaro and Waldman (2012), Bognanno and Melero (2016), and Cassidy et al (2016). Dato et al (2016) also shows similar evidence in experimental labor markets. See also Baker et.…”

Section: Introductionmentioning

confidence: 67%

“…The result is overturned if one assumes that recruiters bid for a worker only if he is promoted while a worker who remains in job 1 is insulated from the outside labor market. 12 In such a setting, the …rm is indeed less likely to use a breakup fee when increases as the countervailing e¤ect mentioned above is weaker. The working-paper version of this article (Mukherjee and Vasconcelos, 2015) presents a complete analysis of this setting.…”

Section: Discussion and Extensionsmentioning

confidence: 99%

On the Trade-off between Efficiency in Job Assignment and Turnover: The Role of Breakup Fees

Mukherjee

Vasconcelos

2018

The Journal of Law, Economics, and Organization

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We highlight a novel trade-o¤ with the use of breakup fees in employment contracts. Under asymmetric learning about workers' productivity, the market takes job assignments (or "promotions") as a signal of quality and bids up the wages of a promoted worker, leading to ine¢ ciently few promotions (Waldman, 1984). Breakup fees can mitigate such ine¢ ciencies by shielding the …rm from labor-market competition, but they reduce turnover e¢ ciency when there are …rm-speci…c matching gains. We show that it is optimal to use breakup fees if and only if the di¤erence between the worker's expected productivity in the pre-and post-promotion jobs is small. Also, the relationship between the optimality of breakup fees and the importance of …rm-speci…c human capital is more nuanced than what the extant literature may suggest.

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“…Dato et al. () conduct a laboratory experiment to test the models by Waldman () and Milgrom and Oster ().…”

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confidence: 99%

Promotion signaling, discrimination, and positive discrimination policies

Gürtler

2019

The RAND J of Economics

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This article studies discrimination in a model in which promotions are used as signals of worker ability. The model can account for statistical and taste‐based discrimination. In the short run, a positive discrimination policy is beneficial for workers in the middle of the ability distribution, because these workers are promoted if and only if the policy is in place. Instead, workers of either high or low ability suffer from the policy. In the long run, the policy benefits all targeted workers. The model can explain empirical findings about the effects of a gender quota on the boards of Norwegian companies.

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Asymmetric employer information, promotions, and the wage policy of firms

Cited by 17 publications

References 65 publications

Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning

Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning

On the Trade-off between Efficiency in Job Assignment and Turnover: The Role of Breakup Fees

Promotion signaling, discrimination, and positive discrimination policies

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