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Evidence on Training and Career Paths: Human Capital, Information and Incentives

  • Melero Martín, Eduardo

    ()

    (Universidad Carlos III de Madrid)

In this paper, I analyse the relationship between job-related training and career progress of workers. Most theories of career paths and task assignment rely on human capital accumulation. Therefore, it seems natural to start assessing the empirical validity of such theories by analysing the effect of training on the career progress of an individual. I use the sample of workers from twelve waves of the BHPS (1991-2002) to study the impact of training over the probability of making a career-improving move, using both between-groups and within-group panel data estimators. I find that job-related training received by female workers boosts significantly their chances of being promoted in the next future, while leaving virtually unaffected the chances of male workers. Then, I investigate how do training and promotion jointly influence wage growth. The results show that their interaction is, if any, positive. Additional evidence confirms that the career path of female workers seem to be importantly affected by the market value of their human capital, while that of men might be more affected by the role of promotion systems as mechanisms devised to provide incentives.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1377.

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Length: 43 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1377
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  1. Oded Galor & Nachum Sicherman, 1988. "A Theory of Career Mobility," University of Chicago - George G. Stigler Center for Study of Economy and State 51, Chicago - Center for Study of Economy and State.
  2. James Malcomson & James A. Fairburn, 2000. "Performance, Promotion, and the Peter Principle," Economics Series Working Papers 26, University of Oxford, Department of Economics.
  3. James L. Medoff & Katharine G. Abraham, 1980. "Experience, Performance, and Earnings," NBER Working Papers 0278, National Bureau of Economic Research, Inc.
  4. Baker, George P & Jensen, Michael C & Murphy, Kevin J, 1988. " Compensation and Incentives: Practice vs. Theory," Journal of Finance, American Finance Association, vol. 43(3), pages 593-616, July.
  5. Bernhardt, Dan, 1995. "Strategic Promotion and Compensation," Review of Economic Studies, Wiley Blackwell, vol. 62(2), pages 315-39, April.
  6. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  7. Robert Gibbons & Michael Waldman, 1999. "A Theory Of Wage And Promotion Dynamics Inside Firms," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1321-1358, November.
  8. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-15, September.
  9. Chan, William, 1996. "External Recruitment versus Internal Promotion," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 555-70, October.
  10. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  11. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2003. "A sticky floors model of promotion, pay, and gender," European Economic Review, Elsevier, vol. 47(2), pages 295-322, April.
  12. Lazear, Edward P & Rosen, Sherwin, 1990. "Male-Female Wage Differentials in Job Ladders," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S106-23, January.
  13. 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.
  14. Prendergast, Canice, 1993. "The Role of Promotion in Inducing Specific Human Capital Acquisition," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 523-34, May.
  15. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
  16. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
  17. Paul R. Milgrom, 1984. "Job Discrimination, Market Forces and the Invisibility Hypothesis," Cowles Foundation Discussion Papers 708R, Cowles Foundation for Research in Economics, Yale University, revised 1985.
  18. Francesconi, Marco, 2001. " Determinants and Consequences of Promotions in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(3), pages 279-310, July.
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