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Wage Dynamics and Promotions Inside and Between Firms

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Listed author(s):
  • Silva, António Dias da

    ()

    (European Central Bank)

  • van der Klaauw, Bas

    ()

    (Vrije Universiteit Amsterdam)

Abstract

We focus on the dynamic relation between wage increases, promotions and job changes. We relate our empirical analyses to the theoretical model of Gibbons and Waldman (1999). In the empirical analyses we use the Portuguese matched employer-employee data Quadros de Pessoal. We conclude from finding significant serial correlation in wage increases and promotion rates that employer learning about the worker's ability might be important. Furthermore, we find that the Portuguese labor market is not competitive. Finally, we argue that employer-reported promotion relate to a large extent to wage increases rather than changes in job tasks and complexity.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2351.

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Length: 33 pages
Date of creation: Oct 2006
Publication status: published in: Journal of Population Economics, 2011, 24 (4), 1513-1548
Handle: RePEc:iza:izadps:dp2351
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Keywords: competition; learning; matched employer-employee data; dynamic panel data models;

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Find related papers by JEL classification:
  • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
  • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
  • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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Cited by:

  1. Francesca Sgobbi & Fátima Suleman, 2015. "The Value of Transferable Skills," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(4), pages 378-399, 09.
  2. Dora Gicheva, 2013. "Working Long Hours and Early Career Outcomes in the High-End Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 785-824.
  3. Kauhanen, Antti & Napari, Sami, 2011. "Career and Wage Dynamics: Evidence from Linked Employer-Employee Data," Discussion Papers 1244, The Research Institute of the Finnish Economy.
  4. Dato, Simon & Grunewald, Andreas & Kräkel, Matthias & Müller, Daniel, 2016. "Asymmetric employer information, promotions, and the wage policy of firms," Games and Economic Behavior, Elsevier, vol. 100(C), pages 273-300.
  5. C. Sofia Machado & Miguel Portela, 2011. "Age and opportunities for promotion," NIPE Working Papers 03/2011, NIPE - Universidade do Minho.
  6. Kazuaki Okamura, 2011. "The Signalling Role of Promotion in Japan," Discussion Papers 1112, Graduate School of Economics, Kobe University.
  7. Michael Waldman, 2012. "Theory and Evidence in Internal Labor Markets," Introductory Chapters,in: Robert Gibbons & John Roberts (ed.), The Handbook of Organizational Economics Princeton University Press.
  8. Frederiksen, Anders, 2013. "Incentives and earnings growth," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 97-107.
  9. Cassidy, Hugh & DeVaro, Jed & Kauhanen, Antti, 2016. "Promotion signaling, gender, and turnover: New theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 140-166.

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