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Prestige, promotion, and pay

Author

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  • Ferreira, Daniel
  • Nikolowa, Radoslawa

Abstract

We develop a theory in which financial (and other professional services) firms design career structures to “sell” prestigious jobs to qualified candidates. Firms create less prestigious entry-level jobs, which serve as currency for employees to pay for the right to compete for the more prestigious jobs. In optimal career structures, entry-level employees (“associates”) compete for better-paid and more prestigious positions (“managing directors” or “partners”). The model provides new implications relating job prestige to compensation, employment, competition, and the size of the financial sector.

Suggested Citation

  • Ferreira, Daniel & Nikolowa, Radoslawa, 2024. "Prestige, promotion, and pay," LSE Research Online Documents on Economics 118369, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:118369
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    File URL: http://eprints.lse.ac.uk/118369/
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    References listed on IDEAS

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    More about this item

    Keywords

    job prestige; professional careers; financial service firms;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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    This paper has been announced in the following NEP Reports:

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