Earnings Progression, Human Capital and Incentives: Theory and Evidence
Anders Frederiksen ()
No 4863, IZA Discussion Papers from Institute of Labor Economics (IZA)
The career prospects of newly recruited employees differ substantially within an organization. The stars experience a considerable growth in earnings; others can hardly maintain their entry salaries. This article sheds light on the mechanisms generating the observed heterogeneity in earnings progression by investigating the effects of on-the-job human capital acquisition, explicit short-run incentives and career concern incentives on earnings progression. The model leads to predictions about the incentive structure and the progression in both cross-sectional and individual earnings which are supported by the empirical analysis based on personnel records from a large bank.
Keywords: personnel economics; explicit incentives; career concern incentives; performance; earnings dynamics (search for similar items in EconPapers)
JEL-codes: J30 J41 M50 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-hrm and nep-lab
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Published - published as 'Incentives and Earnings Growth' in: Journal of Economic Behavior and Organization, 2013, 85 (1), 97-107
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp4863
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