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Incentives and earnings growth

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Author Info

  • Frederiksen, Anders

Abstract

The career prospects of newly recruited employees differ substantially within an organization. The stars experience considerable growth in earnings; others can hardly maintain their entry salaries. This article sheds light on the mechanisms generating the observed heterogeneity in earnings growth by investigating the effects that explicit short-run incentives and implicit incentives have on earnings growth. The model's predictions are tested using personnel records from a large bank and are found to be consistent with the observed earnings growth during the first half of the employees’ careers.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167268112002417
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 85 (2013)
Issue (Month): C ()
Pages: 97-107

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Handle: RePEc:eee:jeborg:v:85:y:2013:i:c:p:97-107

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Explicit incentives; Implicit incentives; Performance; Earnings growth; Personnel economics;

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