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Managerial Task Assignment and Promotions

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  • Ricart i Costa, Joan E
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    Abstract

    A two-period model of managerial task assignment is developed, where the current employer has the advantage of observing the actual performanc e of the manager, while outside employers can observe only the assign ments. Optimal contracts are rigid, but the market value of managers is below actual productivity and they are promoted less than is effic ient. The author introduces the idea of managers explo iting their information to separate themselves out in the market plac e. As a consequence, the model has the appealing property of small ab ility-based wage differentials within a task, as well as large ones b etween tasks. Copyright 1988 by The Econometric Society.

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    Bibliographic Info

    Article provided by Econometric Society in its journal Econometrica.

    Volume (Year): 56 (1988)
    Issue (Month): 2 (March)
    Pages: 449-66

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    Handle: RePEc:ecm:emetrp:v:56:y:1988:i:2:p:449-66

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    Cited by:
    1. Koch, Alexander K. & Peyrache, Eloic, 2005. "Tournaments, Individualized Contracts and Career Concerns," IZA Discussion Papers 1841, Institute for the Study of Labor (IZA).
    2. Lima, Francisco & Pereira, Pedro T., 2001. "Careers and Wage Growth within Large Firms," IZA Discussion Papers 336, Institute for the Study of Labor (IZA).
    3. Michael Waldman, 1990. "A Signalling Explanation for Seniority Based Promotions and Other Labor Market Puzzles," UCLA Economics Working Papers 599, UCLA Department of Economics.
    4. Michael Waldman, 1989. "Up-or-Out Contracts: A Signaling Perspective," UCLA Economics Working Papers 556, UCLA Department of Economics.
    5. Robert Gibbons & Michael Waldman, 1998. "A Theory of Wage and Promotion Dynamics in Internal Labor Markets," NBER Working Papers 6454, National Bureau of Economic Research, Inc.
    6. Koch, Alexander K. & Peyrache, Eloic, 2005. "Aligning Ambition and Incentives," IZA Discussion Papers 1527, Institute for the Study of Labor (IZA).
    7. Carolyn Pitchik, 2008. "Self-Promoting Investments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 381-406, September.
    8. Guillermo Caruana & Marco Celentani, 2001. "Career Concerns And Contingent Compensation," Economics Working Papers we014811, Universidad Carlos III, Departamento de Economía.
    9. Alexander K. Koch & Julia Nafziger, 2012. "Job Assignments under Moral Hazard: The Peter Principle Revisited," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 1029-1059, December.
    10. Lima, Francisco, 2000. "Internal labour markets: a case study," FEUNL Working Paper Series wp378, Universidade Nova de Lisboa, Faculdade de Economia.
    11. Eguchi, Kyota, 2004. "Minimum wages enhancing trainers' incentives," ISER Working Paper Series 2004-18, Institute for Social and Economic Research.
    12. Kameshwari Shankar & Suman Ghosh, 2005. "Favorable Selection in the Labor Market: A Theory of Worker Mobility in R&D Intensive Industries," Working Papers 05006, Department of Economics, College of Business, Florida Atlantic University.

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