Promotions and Incentives in Partnerships: Evidence from Major U.S. Law Firms

Christopher Ferrall

Canadian Journal of Economics, 1996, vol. 29, issue 4, 811-27

Abstract: This paper develops a model of promotions in partnerships and estimates the model using cross-sectional data on major U.S. law firms. Promotions to partner screen associates for firm-specific skills and they generate tournament incentives among associates competing for promotions. The key parameters of the model are estimated by imposing the equilibrium restriction that firms offer equal utility to incoming associates. The incentive component of compensation is found to be statistically significant and a nested model without promotion incentives is rejected by the data.

Date: 1996
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Citations: View citations in EconPapers (21)

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