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Promotions and Incentives in Nonprofit and For-Profit Organizations

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  • Jed Devaro
  • Dana Brookshire

Abstract

Using data from the 1992-95 Multi-City Study of Urban Inequality employer survey, the authors document a new empirical finding that workers are less likely to receive promotions in nonprofit organizations than in for-profit firms. The study also uncovers evidence that among the sampled employers, wage increases associated with promotion were of comparable magnitudes in the two sectors, as was the potential for within-job wage growth; nonprofits were less likely than for-profits to base promotions on job performance or merit; nonprofits were less likely to use output-contingent incentive contracts to motivate workers; and the observed difference in promotion rates between the nonprofit and for-profit sectors was more pronounced for high-skilled than for low-skilled workers. The authors also propose a theory that potentially explains the broad pattern of evidence they uncover, based on the idea that nonprofit workers are more intrinsically motivated (attracted to their work for reasons transcending material compensation) than are for-profit workers.

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 60 (2007)
Issue (Month): 3 (April)
Pages: 311-339

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Handle: RePEc:ilr:articl:v:60:y:2007:i:3:p:311-339

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Cited by:
  1. Addison, John T. & Ozturk, Orgul Demet & Wang, Si, 2012. "Promotion and Wages in Mid-Career: Gender, Unionism, and Sector," IZA Discussion Papers 6873, Institute for the Study of Labor (IZA).
  2. DeVaro, Jed, 2011. "Using "opposing responses" and relative performance to distinguish empirically among alternative models of promotions," MPRA Paper 35175, University Library of Munich, Germany.
  3. Francine D. Blau & Jed DeVaro, 2006. "New Evidence on Gender Difference in Promotion Rates: An Empirical Analysis of a Sample of New Hires," NBER Working Papers 12321, National Bureau of Economic Research, Inc.
  4. Avner Ben-Ner & Matthew Ellman, 2013. "The contributions of behavioural economics to understanding and advancing the sustainability of worker cooperatives," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 75-100, August.
  5. Joseph Lanfranchi & Mathieu Narcy, 2013. "Effort and Monetary Incentives in Nonprofit and For-Profit Organizations," TEPP Working Paper 2013-01, TEPP.
  6. Teresa Proenca & Simone Cristina, 2013. "Motivation in paid work for non-profit organisations: the case of Private Social Solidarity Institutions," FEP Working Papers 515, Universidade do Porto, Faculdade de Economia do Porto.
  7. Sarah Kaine & Jenny Green, 2013. "Outing the Silent Partner: Espousing the Economic Values that Operate in Not-For-Profit Organizations," Journal of Business Ethics, Springer, vol. 118(1), pages 215-225, November.
  8. Lanfranchi, Joseph & Narcy, Mathieu & Larguem, Makram, 2009. "Would you accept this job? An evaluation of the decision utility of workers in the for-profit and nonprofit sectors," MPRA Paper 16359, University Library of Munich, Germany.

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