Careers in Ongoing Hierarchies
Dominique Demougin () and
Aloysius Siow ()
American Economic Review, 1994, vol. 84, issue 5, 1261-77
The probability that an unskilled worker can be successfully trained or screened to be a manager depends on the effort of the firm. With positive hiring costs, a firm prefers to train/screen its own managers. However, the optimal size of the firm for productive efficiency may conflict with efficient managerial husbandry. How a firm copes with the above constraint generates stochastic layoffs, lateral mobility, promotions, diverse earnings profiles, fast-track jobs, and up-or-out rules. Copyright 1994 by American Economic Association.
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Working Paper: Careers in Ongoing Hierarchies (1992)
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