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Career Concerns: A Human Capital Perspective

  • Braz Camargo

    (Sao Paulo School of Economics-FGV)

We introduce human capital accumulation, in the form of learning--by--doing, in a life--cycle model of career concerns and analyze how human capital acquisition affects implicit incentives for performance. We show that standard results from the career concerns literature can be reversed in the presence of human capital acquisition. Namely, implicit incentives need not decrease over time and may decrease with the degree of uncertainty about an individual's talent. Furthermore, increasing the precision of output measurement can weaken rather than strengthen implicit incentives. Overall, our results contribute to shed new light on the ability of markets to discipline moral hazard in the absence of explicit contracts linking pay to performance.

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File URL: https://www.economicdynamics.org/meetpapers/2011/paper_1274.pdf
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Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 1274.

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Date of creation: 2011
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Handle: RePEc:red:sed011:1274
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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  1. Braz Camargo, 2011. "Career Concerns: A Human Capital Perspective," 2011 Meeting Papers 1274, Society for Economic Dynamics.
  2. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers 88-05, Rochester, Business - Managerial Economics Research Center.
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  21. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
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