Promotion Rat Race and Public Policy
This study investigates whether excess effort to climb a career ladder justifies policy interventions. The answer depends on whether the government is able to levy a higher tax burden on career workers than on non-career workers. Both a tax on top income aimed at lowering the rewards of promotion and a labour law that restricts excess effort require such a differentiation in the tax burden to improve welfare. The differentiation in tax burden prevents that the welfare gain of reducing excess effort is neutralized by the welfare cost connected to an increase in the number of career workers.
|Date of creation:||2012|
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- Benny Moldovanu & Aner Sela & Xianwen Shi, 2007.
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NBER Working Papers
16812, National Bureau of Economic Research, Inc.
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NBER Working Papers
15408, National Bureau of Economic Research, Inc.
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"Rank-Order Tournaments as Optimum Labor Contracts,"
NBER Working Papers
0401, National Bureau of Economic Research, Inc.
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- Jed DeVaro, 2005.
"Internal Promotion Competitions in Firms,"
Labor and Demography
- Mats Persson & Agnar Sandmo, 2005.
"Taxation and Tournaments,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 7(4), pages 543-559, October.
- Fairburn, J.A. & Malcomson, J.M., 1995.
"Performance, Promotion, and the Peter Principle,"
UFAE and IAE Working Papers
304.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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- Bognanno, Michael L, 2001. "Corporate Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 290-315, April.
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-348, June.
- George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 881-919.
- Fredrik Carlsson & Olof Johansson-Stenman & Peter Martinsson, 2007.
"Do You Enjoy Having More than Others? Survey Evidence of Positional Goods,"
London School of Economics and Political Science, vol. 74(296), pages 586-598, November.
- Carlsson, Fredrik & Johansson-Stenman, Olof & Martinsson, Peter, 2003. "Do You Enjoy Having More Than Others? Survey Evidence of Positional Goods," Working Papers in Economics 100, University of Gothenburg, Department of Economics.
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