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Incentives and Careers in Organizations

  • Robert Gibbons

This paper surveys two related pieces of the labor-economics literature: incentive pay and careers in organizations. In the discussion of incentives, I first summarize theory and evidence related to the classic agency model, which emphasizes the tradeoff between insurance and incentives. I then offer econometric and case-study evidence suggesting that this classic model ignores several crucial issues and sketch new models that begin to analyze these issues. In the discussion of careers in organizations, I begin by summarizing evidence on wages and positions using panel data within firms. This evidence is sparse and far-flung (drawn from industrial relations, organizational behavior, and sociology, as well as from labor economics); I identify ten basic questions that merit more systematic investigation. Turning to theory, I describe building-block models that address one or a few pieces of evidence, but focus on more recent models that address broad patterns of evidence.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5705.

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Date of creation: Aug 1996
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Publication status: published as Advances in Economics and Econometrics: Theory and Applications, ed. D.Kreps and K. Wallis, Cambridge University Press, 1995.
Handle: RePEc:nbr:nberwo:5705
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