Wage Structure and the Incentive Effect of Promotions

Marco van Herpen (), Kees Cools () and Mirjam Praag
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Marco van Herpen: Groningen University, and BCG
Kees Cools: Groningen University, and BCG

No 04-107/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper studies wage structure characteristics and their incentive effects within one firm. Based on personnel records and an employee survey, we provide evidence that wages are attached to jobs and that promotions play a dominant role as a wage determinant. We furthermore show that a promotion affects both intrinsic and extrinsic motivation significantly, though in two different ways: An expected promotion increases extrinsic motivation whereas intrinsic motivation is highest subsequent to a realized promotion. The relationship between extrinsic motivation and expected promotions implies that promotions have a clear incentive effect, consistent with a key – not yet tested – prediction of the tournament model.

This discussion paper has resulted in a publication in Kyklos International Review for Social Science , 2006, 59(3), 441-59.

Keywords: promotions; incentives; tournament model; internal labor market; extrinsic motivation; intrinsic motivation (search for similar items in EconPapers)
JEL-codes: J33 J41 M51 M52 (search for similar items in EconPapers)
Date: 2004-09-23
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Wage Structure and the Incentive Effects of Promotions (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20040107

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