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On the Job Screening, Up or Out Rules, and Firm Growth

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Author Info

  • O'Flaherty, B.
  • Siow, A.

Abstract

This paper uses on-the-job screening to derive a stochastic and dynamic model of hiring, promotion, and dismissal policies, and their impact on total firm employment and output. The model provides an explanation of the up-or-out rule observed in many organizations. It also provides an explanation for a cost-of-adjustment mechanism for the stock of human capital in a firm.

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Bibliographic Info

Paper provided by Chicago - Economics Research Center in its series University of Chicago - Economics Research Center with number 90-11.

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Length: 39 pages
Date of creation: 1990
Date of revision:
Handle: RePEc:fth:chicer:90-11

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Phone: (773)834-0761
Web page: http://economics.uchicago.edu/research.shtml
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Keywords: economic models ; employment ; enterprises;

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Cited by:
  1. Black, Dan A. & Loewenstein, Mark A., 1997. "Dismissals and match-specific rents," Labour Economics, Elsevier, vol. 4(4), pages 325-340, December.
  2. Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
  3. James B. Rebitzer & Lowell J. Taylor, 2007. "When Knowledge Is an Asset: Explaining the Organizational Structure of Large Law Firms," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 201-229.
  4. Abe, Naohito & Gaston, Noel & Kubo, Katsuyuki, 2005. "Executive pay in Japan: the role of bank-appointed monitors and the Main Bank relationship," Japan and the World Economy, Elsevier, vol. 17(3), pages 371-394, August.
  5. Siow, Aloysius & Zhu, Xiaodong, 1997. "The creation of plants and firms," Journal of Economic Dynamics and Control, Elsevier, vol. 22(1), pages 141-178, November.
  6. Jovanovic, Boyan & Nyarko, Yaw, 1997. "Stepping-stone mobility," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 289-325, June.
  7. Demougin, Dominique & Siow, Aloysius, 1996. "Managerial husbandry and the dynamics of ongoing hierarchies," European Economic Review, Elsevier, vol. 40(7), pages 1483-1499, August.
  8. Sengupta, Sarbajit, 2004. "Delegating recruitment under asymmetric information," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1327-1347, November.
  9. Braz Camargo & Elena Pastorino, 2012. "Learning-by-employing: the value of commitment under uncertainty," Staff Report 475, Federal Reserve Bank of Minneapolis.
  10. Cowen, Tyler & Glazer, Amihai, 2007. "Esteem and ignorance," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 373-383, July.
  11. 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.

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