Allocating Effort and Talent in Professional Labor Markets

Gadi Barlevy and Derek Neal

Journal of Labor Economics, 2019, vol. 37, issue 1, 187 - 246

Abstract: In many professional service firms, new associates work long hours while competing in up-or-out promotion contests. Our model explains why. We argue that the productivity of skilled partners in professional service firms (e.g., law, consulting, investment banking, and public accounting) is quite large relative to the productivity of their peers who are competent and experienced but not well suited to the partner role. Therefore, these firms adopt personnel policies that facilitate the identification of new partners. In our model, both heavy workloads and up-or-out rules serve this purpose.

Date: 2019
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Related works:
Working Paper: Allocating Effort and Talent in Professional Labor Markets (2017)
Working Paper: Allocating Effort and Talent in Professional Labor Markets (2016)
Working Paper: Allocating Effort and Talent in Professional Labor Markets (2016)
Working Paper: Allocating Effort and Talent in Professional Labor Markets (2016)
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