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Compensation Dispersion Between and Within Hierarchical Levels

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  • Pedro Ortín‐Ángel
  • Vicente Salas‐Fumás

Abstract

This paper studies the dispersion around the expected compensation of workers before and after controlling for hierarchical positions in cross‐section data samples. From data for Spanish managers, we find that this dispersion decreases with education and work experience before entering the current job and increases with job tenure. This finding contrasts with previous research that finds a positive association between compensation dispersion and education and work experience. We explain the new finding through a model of learning that separates compensation dispersion between jobs and within jobs (hierarchical positions). The model takes advantage of the information revealed when workers are promoted to their current hierarchical positions and allows for more robust tests of learning theories.

Suggested Citation

  • Pedro Ortín‐Ángel & Vicente Salas‐Fumás, 2007. "Compensation Dispersion Between and Within Hierarchical Levels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 53-79, March.
    • Handle: RePEc:bla:jemstr:v:16:y:2007:i:1:p:53-79
    DOI: 10.1111/j.1530-9134.2007.00132.x
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    3. Dong, Baomin & Fu, Shihe & Gong, Jiong & Fan, Hanwen, 2014. "The Lame Drain," MPRA Paper 53825, University Library of Munich, Germany.

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