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Perceived Income, Promotion and Incentive Effects

Author

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  • Epstein, Gil S.

    () (Bar-Ilan University)

  • Ward-Warmedinger, Melanie E.

    () (European Central Bank)

Abstract

This paper examines the disincentive effects of perceived underpayment on individuals’ exerted effort and promotion. To this end we develop a theoretical framework and obtain empirical evidence by analysing British academia data. We find that, tenured academics will tend to invest less effort in publishing as the difference between their perceived deserved income and actual income increases. On the other hand, for non-tenured academics this relationship is ambiguous. Our model predicts that if, however, tenured staff also derive utility directly from publication, over and above that associated with income and promotion, the difference between perceived and actual income has a smaller negative effect on the actual effort invested in research.

Suggested Citation

  • Epstein, Gil S. & Ward-Warmedinger, Melanie E., 2002. "Perceived Income, Promotion and Incentive Effects," IZA Discussion Papers 435, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp435
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    References listed on IDEAS

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    1. Epstein, Gil S. & Spiegel, Uriel, 2001. "Natural inequality, production and economic growth," Labour Economics, Elsevier, vol. 8(4), pages 463-473, September.
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    Cited by:

    1. Epstein, Gil S, 2002. "Informational Cascades and Decision to Migrate," CEPR Discussion Papers 3287, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    productivity; underpayment; Perceived income; promotion;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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