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Status and Incentives

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Author Info
Emmanuelle Auriol (ARQADE and IDEI, Université des Sciences Sociales de Toulouse, and Institut Universitaire de France)
Régis Renault () (Université de Cergy-Pontoise, Théma and Institut Universitaire de France)

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Abstract

The paper introduces status as reflecting an agent's claim to recognition in her work. It is a scarce resource: increasing an agent's status requires that another agent's status is decreased. Higher status agents are more willing to exert effort in exchange for money; better-paid agents would exert a higher effort in exchange for an improved status. Results are coherent with actual management practices: (i) egalitarianism is desirable in a static context; (ii) in a long-term work relationship, juniors' compensations are delayed; past performances are recompensed by pay increases along with an improved status within the organization's hierarchy.

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Publisher Info
Paper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2007-01.

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Date of creation: 2007
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Handle: RePEc:ema:worpap:2007-01

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Related research
Keywords: repeated moral hazard internal labor markets social status

Other versions of this item:

Find related papers by JEL classification:
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Paul Oyer, 2005. "Salary or Benefits?," NBER Working Papers 11817, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
  4. Edward P. Lazear & Paul Oyer, 2004. "The Structure of Wages and Internal Mobility," American Economic Review, American Economic Association, vol. 94(2), pages 212-216, May. [Downloadable!] (restricted)
  5. Fershtman, C. & Weiss, Y. & Hvide, H.K., 2001. "Status Concerns and the Organization of Work," Papers 2001-2, Tel Aviv.
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    Other versions:
  9. Salop, Joanne & Salop, Steven, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 619-27, November. [Downloadable!] (restricted)
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  12. Erica Groshen & David Levine, 1998. "The rise and decline(?) of U.S. internal labor markets," Research Paper 9819, Federal Reserve Bank of New York. [Downloadable!]
  13. Raghuram Rajan & Julie Wulf, 2004. "Are Perks Purely Managerial Excess?," NBER Working Papers 10494, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Postlewaite, Andrew, 1998. "The social basis of interdependent preferences," European Economic Review, Elsevier, vol. 42(3-5), pages 779-800, May. [Downloadable!] (restricted)
    Other versions:
  15. Ball, Sheryl & Eckel, Catherine C., 1998. "The Economic Value of Status," The Journal of Socio-Economics, Elsevier, vol. 24(4), pages 495-514. [Downloadable!] (restricted)
  16. Robert H. Frank, 1984. "Interdependent Preferences and the Competitive Wage Structure," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 510-520, Winter. [Downloadable!] (restricted)
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  18. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May. [Downloadable!] (restricted)
    Other versions:
  19. Fershtman, Chaim & Hvide, Hans K & Weiss, Yoram, 2003. "Cultural Diversity, Status Concerns and the Organization of Work," CEPR Discussion Papers 3982, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  20. Ghemawat, Pankaj, 1995. "Competitive Advantage and Internal Organization: Nucor Revisited," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(4), pages 685-717, Winter.
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    Other versions:
  22. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier. [Downloadable!] (restricted)
  23. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December. [Downloadable!] (restricted)
    Other versions:
  24. John M. Abowd & John Haltiwanger & Julia Lane, 2004. "Integrated Longitudinal Employer-Employee Data for the United States," American Economic Review, American Economic Association, vol. 94(2), pages 224-229, May. [Downloadable!] (restricted)
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  26. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status In Markets," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 161-188, February. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alexander K. Koch & Julia Nafziger, 2007. "Job Assignments under Moral Hazard: The Peter Principle Revisited," IZA Discussion Papers 2973, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Andrea Patacconi & Florian Ederer, MIT, 2005. "Interpersonal Comparison, Status and Ambition in Organisations," Economics Series Working Papers 222, University of Oxford, Department of Economics. [Downloadable!]
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