The Signaling Role of Not Being Promoted: Theory and Evidence

Xin Jin ()

No 314, Working Papers from University of South Florida, Department of Economics

Abstract: This article studies the negative signals associated with non-promotion. I first show theoretically that, when workers� productivity rises little with additional years on the same job level, the negative signal associated with non-promotion leads to wage decreases. On the other hand, when additional job-level tenure leads to a sizable increase in productivity, workers� wages increase. I test my model�s predictions using the personnel records from a large US firm from 1970-1988. I find a clear hump-shaped wage-job-tenure profile for workers who stay in the same job level, which supports my model�s prediction.

Keywords: Asymmetric Information; Human Capital Accumulation; Signaling; Promotion; Wages (search for similar items in EconPapers)
JEL-codes: J24 J31 M51 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2014-09
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-lab and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:usf:wpaper:0314

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