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Wage Structure and the Incentive Effects of Promotions

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Author Info

  • Marco Van Herpen
  • Kees Cools
  • Mirjam Van Praag

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. Copyright 2006 Blackwell Publishing Ltd..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Kyklos.

Volume (Year): 59 (2006)
Issue (Month): 3 (08)
Pages: 441-459

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Handle: RePEc:bla:kyklos:v:59:y:2006:i:3:p:441-459

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962

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Cited by:
  1. Marco Herpen & Mirjam Praag & Kees Cools, 2005. "The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study," De Economist, Springer, vol. 153(3), pages 303-329, 09.
  2. Becchetti, Leonardo & Castriota, Stefano, 2010. "Wage differentials in social enterprises," AICCON Working Papers 68-2010, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.

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