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Career concerns: A human capital perspective

  • Camargo, Braz
  • Pastorino, Elena

We introduce human capital accumulation, in the form of learning by doing, in a life cycle model of career concerns and analyze how human capital acquisition a ects implicit incentives for performance. We show that standard results from the career concerns literature can be reversed in the presence of human capital accumulation. Namely, implicit incentives need not decrease over time and may decrease with the degree of uncertainty about an individual's talent. Furthermore, increasing the pre- cision of output measurement can weaken rather than strengthen implicit incentives. Overall, our results contribute to shed new light on the ability of markets to discipline moral hazard in the absence of explicit contracts linking pay to performance.

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File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/10002/1/TD+288+-+C-Micro+08+-+Braz+de+Camargos.pdf
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Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 288.

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Date of creation: 12 Sep 2012
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Handle: RePEc:fgv:eesptd:288
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  1. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  2. Levy, Gilat, 2003. "Careerist Judges," CEPR Discussion Papers 3948, C.E.P.R. Discussion Papers.
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  5. Mattozzi, Andrea & Merlo, Antonio, 2008. "Political careers or career politicians?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 597-608, April.
  6. Antonio Cabrales & Olivier Gossner & Roberto Serrano, 2010. "Entropy and the value of information for investors," Working Papers 2010-17, Brown University, Department of Economics.
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  8. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
  9. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314, June.
  10. Camargo, Braz & Pastorino, Elena, 2012. "Career concerns: A human capital perspective," Textos para discussão 288, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  11. Federico Echenique & Ivana Komunjer, 2009. "Testing Models With Multiple Equilibria by Quantile Methods," Econometrica, Econometric Society, vol. 77(4), pages 1281-1297, 07.
  12. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1125-56, November.
  13. Leonardo Martinez, 2006. "Reputation and Career Concerns," 2006 Meeting Papers 853, Society for Economic Dynamics.
  14. Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 881-919, November.
  15. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  16. Botond KÅ‘szegi & Wei Li, 2008. "Drive and Talent," Journal of the European Economic Association, MIT Press, vol. 6(1), pages 210-236, 03.
  17. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
  18. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
  19. Leonardo Martinez, 2009. "Reputation, career concerns, and job assignments," Working Paper 06-01, Federal Reserve Bank of Richmond.
  20. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  21. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
  22. Shaw, Kathryn L, 1989. "Life-Cycle Labor Supply with Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 431-56, May.
  23. Leonardo Martinez, 2008. "A theory of political cycles," Working Paper 05-04, Federal Reserve Bank of Richmond.
  24. Altug, Sumru & Miller, Robert A, 1998. "The Effect of Work Experience on Female Wages and Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 65(1), pages 45-85, January.
  25. Heski Bar-Isaac & Juan-José Ganuza, 2008. "Recruitment, Training, and Career Concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(4), pages 839-864, December.
  26. Jaime Ortega, 2003. "Power in the Firm and Managerial Career Concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 1-29, 03.
  27. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563 Elsevier.
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