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Career Concerns in a Simple Experimental Labour Market

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  • Irlenbusch, Bernd

    ()
    (University of Cologne)

  • Sliwka, Dirk

    ()
    (University of Cologne)

Abstract

We experimentally investigate a simple version of Holmström’s career concerns model in which firms compete for agents in two consecutive periods. Profits of firms are determined by agents’ unknown ability and the effort they choose. Before making second-period wage offers firms are informed about first-period profits. In a different treatment firms additionally learn the abilities of agents. Theory suggests high first-period equilibrium effort in the hidden ability treatment but no effort elsewhere. However, we find that effort is significantly higher in the revealed ability treatment and therefore conclude that transparency does not weaken, but strengthen career concerns incentives.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 855.

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Length: 31 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published in: European Economic Review, 2006, 50 (1), 147-170
Handle: RePEc:iza:izadps:dp855

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Keywords: career concerns; reciprocity; reputation; labour market; incentives;

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References

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Citations

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Cited by:
  1. Alexander K. Koch & Albrecht Morgenstern & Philippe Raab, 2004. "An experimental test of career concerns," Bonn Econ Discussion Papers, University of Bonn, Germany bgse20_2004, University of Bonn, Germany.
  2. Charness, Gary & Kuhn, Peter J., 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," IZA Discussion Papers 4941, Institute for the Study of Labor (IZA).
  3. Koch, Alexander K. & Morgenstern, Albrecht & Raab, Philippe, 2009. "Career concerns incentives: An experimental test," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 72(1), pages 571-588, October.
  4. Brandes, Leif & Franck, Egon, 2012. "Social preferences or personal career concerns? Field evidence on positive and negative reciprocity in the workplace," Journal of Economic Psychology, Elsevier, Elsevier, vol. 33(5), pages 925-939.
  5. Frederiksen, Anders, 2010. "Earnings Progression, Human Capital and Incentives: Theory and Evidence," IZA Discussion Papers 4863, Institute for the Study of Labor (IZA).
  6. Bernd Irlenbusch, 2006. "Experimental perspectives on incentives in organisations," Central European Journal of Operations Research, Springer, Springer, vol. 14(1), pages 1-24, February.

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