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The Signaling Role of Note Being Promoted: Theory and Evidence

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  • Jin, Xin
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    This article studies the negative signals associated with non-promotion. I first show theoretically that, when workers’ productivity rises little with additional years on the same job level, the negative signal associated with non-promotion leads to wage decreases. On the other hand, when additional job-level tenure leads to a sizable increase in productivity, workers’ wages increase. I test my model’s predictions using the personnel records from a large US firm from 1970-1988. I find a clear hump-shaped wage-job-tenure profile for workers who stay in the same job level, which supports my model’s prediction.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 58484.

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    Date of creation: 2014
    Handle: RePEc:pra:mprapa:58484
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