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Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector

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  • Deserranno, Erika
  • León-Ciliotta, Gianmarco

Abstract

We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance and variation in perceived pay progression among the lowest tier of health workers. We find that meritocratic promotions lead to higher productivity, and more so when workers expect a steep pay increase. However, when promotions are not meritocratic, increasing the pay gradient reduces productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.

Suggested Citation

  • Deserranno, Erika & León-Ciliotta, Gianmarco, 2022. "Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector," CEPR Discussion Papers 15837, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15837
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    More about this item

    Keywords

    Promotions; Meritocracy; Pay progression; Worker productivity;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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