The Signaling Role of Note Being Promoted: Theory and Evidence

Xin Jin

MPRA Paper from University Library of Munich, Germany

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)
Date: 2014
New Economics Papers: this item is included in nep-cta and nep-hrm
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https://mpra.ub.uni-muenchen.de/58512/1/MPRA_paper_58484.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58484

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