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Household specialization and competition for promotion

Author

Listed:
  • Bastani, Spencer

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

  • Dickmanns, Lisa

    (Department of Economics, University of Cologne)

  • Giebe, Thomas

    (Department of Economics and Statistics, School of Business and Economics, Linnaeus University, Sweden)

  • Gürtler, Oliver

    (Department of Economics, University of Cologne, Germany)

Abstract

We study how the presence of promotion competition in the labor market affects household specialization patterns. By embedding a promotion tournament model in a household setting, we show that specialization can emerge as a consequence of competitive work incentives.This specialization outcome, in which only one spouse invests heavily in his or her career, can be welfare superior to a situation in which both spouses invest equally in their careers. The reason is that household specialization reduces the intensity of competition and provides households with consumption smoothing. The specialization result is obtained in a setting where spouses are equally competitive in the labor market and there is no household production. It is also robust to several modifications of the model, such as varying the number of households, two spouses competing for promotion in the same workplace, and the inclusion of household production.

Suggested Citation

  • Bastani, Spencer & Dickmanns, Lisa & Giebe, Thomas & Gürtler, Oliver, 2024. "Household specialization and competition for promotion," Working Paper Series 2024:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2024_007
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    Keywords

    contest theory; gender equality; family; household; competition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • 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

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