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Promotion signaling, gender, and turnover: New theory and evidence

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  • Cassidy, Hugh
  • DeVaro, Jed
  • Kauhanen, Antti

Abstract

We extend promotion signaling theory to incorporate gender and across-firm mobility (within and across job levels). Evidence from worker-firm-linked Finnish panel data supports our theory for some groups. Controlling for worker performance (inferred from performance-related pay), within-firm promotion probabilities are increasing (and wage increases from promotion are decreasing) in educational attainment for some educational groups, with results stronger for first than for subsequent promotions. Women have lower promotion probabilities than men and a greater sensitivity of promotion probability to educational attainment. Across-firm promotions are rare but bring wage increases exceeding those for internal promotions and across-firm lateral moves.

Suggested Citation

  • Cassidy, Hugh & DeVaro, Jed & Kauhanen, Antti, 2016. "Promotion signaling, gender, and turnover: New theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 140-166.
  • Handle: RePEc:eee:jeborg:v:126:y:2016:i:pa:p:140-166
    DOI: 10.1016/j.jebo.2016.03.016
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    Cited by:

    1. Waldman, Michael, 2016. "The dual avenues of labor market signaling," Labour Economics, Elsevier, vol. 41(C), pages 120-134.
    2. Nick Deschacht, 2017. "Part-Time Work and Women’s Careers: a Decomposition of the Gender Promotion Gap," Journal of Labor Research, Springer, vol. 38(2), pages 169-186, June.
    3. Kato, Takao & Ogawa, Hiromasa & Owan, Hideo, 2016. "Working Hours, Promotion and the Gender Gap in the Workplace," IZA Discussion Papers 10454, Institute of Labor Economics (IZA).
    4. Dato, Simon & Grunewald, Andreas & Kräkel, Matthias & Müller, Daniel, 2016. "Asymmetric employer information, promotions, and the wage policy of firms," Games and Economic Behavior, Elsevier, vol. 100(C), pages 273-300.
    5. Philipp Grunau & Marco Pecoraro, 2017. "Educational mismatch and promotions to managerial positions: a test of the career mobility theory," Applied Economics, Taylor & Francis Journals, vol. 49(12), pages 1226-1240, March.
    6. Mario Bossler & Philipp Grunau, 2020. "Asymmetric information in external versus internal promotions," Empirical Economics, Springer, vol. 59(6), pages 2977-2998, December.
    7. Leonie Gerhards & Michael Kosfeld, 2020. "I (Don't) Like You! But Who Cares? Gender Differences in Same-Sex and Mixed-Sex Teams," Economic Journal, Royal Economic Society, vol. 130(627), pages 716-739.
    8. Mohsen Javdani & Andrew McGee, 2018. "Labor market mobility and the early-career outcomes of immigrant men," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-28, December.
    9. Jed DeVaro & Oliver Gürtler, 2020. "Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 335-376, April.
    10. Ori Zax, 2020. "Human capital acquisition as a competitive response to the promotion distortion," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 496-509, July.
    11. Dickmanns, Lisa & Gürtler, Marc & Gürtler, Oliver, 2018. "Market-based tournaments: An experimental investigation," Labour Economics, Elsevier, vol. 51(C), pages 294-306.
    12. Neugart, Michael & Zaharieva, Anna, 2018. "Social Networks, Promotions, and the Glass-Ceiling Effect," Center for Mathematical Economics Working Papers 601, Center for Mathematical Economics, Bielefeld University.
    13. João Ricardo Faria & Franklin G. Mixon, 2020. "The Peter and Dilbert Principles applied to academe," Economics of Governance, Springer, vol. 21(2), pages 115-132, June.
    14. Ekinci, Emre, 2019. "Discretionary bonuses and turnover," Labour Economics, Elsevier, vol. 60(C), pages 30-49.
    15. Jed DeVaro & Antti Kauhanen & Nelli Valmari, 2019. "Internal and External Hiring," ILR Review, Cornell University, ILR School, vol. 72(4), pages 981-1008, August.
    16. David Wettstein & Ori Zax, 2018. "Promotion Policies of Workers who Observe their Ability," Economics Bulletin, AccessEcon, vol. 38(4), pages 2509-2514.
    17. Deutscher, Christian & Gürtler, Marc & Gürtler, Oliver & DeVaro, Jed, 2020. "Firm choice and career success - theory and evidence," European Economic Review, Elsevier, vol. 127(C).
    18. Leonora Risse, 2020. "Leaning in: Is higher confidence the key to women's career advancement?," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 23(1), pages 43-77.

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