Promotion rat race and public policy
This study investigates whether excess effort to climb a career ladder justifies policy interventions. The answer depends on whether the government is able to levy a higher tax burden on career workers than on non-career workers. Both a tax on top income aimed at lowering the rewards of promotion and a labour law that restricts excess effort require such a differentiation in the tax burden to improve welfare. The differentiation in tax burden prevents that the welfare gain of reducing excess effort is neutralized by the welfare cost connected to an increase in the number of career workers.
|Date of creation:||Mar 2012|
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References listed on IDEAS
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- Sandmo, Agnar, 1994. " The Tax They Pay May Be Your Own: Promotion, Taxes and Labour Supply," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(4), pages 463-479.
- Frydman, Carola & Molloy, Raven S., 2011.
"Does tax policy affect executive compensation? Evidence from postwar tax reforms,"
Journal of Public Economics,
Elsevier, vol. 95(11), pages 1425-1437.
- Carola Frydman & Raven S. Molloy, 2011. "Does Tax Policy Affect Executive Compensation? Evidence from Postwar Tax Reforms," NBER Working Papers 16812, National Bureau of Economic Research, Inc.
- Carola Frydman & Raven S. Molloy, 2009. "Does tax policy affect executive compensation? evidence from postwar tax reforms," Finance and Economics Discussion Series 2009-30, Board of Governors of the Federal Reserve System (U.S.).
- James Malcomson & James A. Fairburn, 2000.
"Performance, Promotion, and the Peter Principle,"
Economics Series Working Papers
26, University of Oxford, Department of Economics.
- Fairburn, J.A. & Malcomson, J.M., 1995. "Performance, Promotion, and the Peter Principle," UFAE and IAE Working Papers 304.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Fairburn, J.A. & Malcomson, J.M., 2000. "Performance, Promotion, and the Peter Principle," Economics Series Working Papers 9926, University of Oxford, Department of Economics.
- George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 881-919.
- Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011.
"Top Incomes in the Long Run of History,"
Journal of Economic Literature,
American Economic Association, vol. 49(1), pages 3-71, March.
- Anthony Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Post-Print halshs-00754557, HAL.
- Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2009. "Top Incomes in the Long Run of History," NBER Working Papers 15408, National Bureau of Economic Research, Inc.
- Benny Moldovanu & Aner Sela & Xianwen Shi, 2007.
"Contests for Status,"
Journal of Political Economy,
University of Chicago Press, vol. 115, pages 338-363.
- Moldovanu, Benny & Sela, Aner & Shi, Xianwen, 2005. "Contests for Status," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 139, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Benny Moldovanu & Aner Sela & Xianwen Shi, 2006. "Contests For Status," Working Papers 0604, Ben-Gurion University of the Negev, Department of Economics.
- Persson, Mats & Sandmo, Agnar, 2002.
"Taxation and Tournaments,"
715, Stockholm University, Institute for International Economic Studies.
- Jed DeVaro, 2006.
"Internal promotion competitions in firms,"
RAND Journal of Economics,
RAND Corporation, vol. 37(3), pages 521-542, 09.
- Bognanno, Michael L, 2001. "Corporate Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 290-315, April.
- Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
- Michael Waldman, 2003. "Ex Ante versus Ex Post Optimal Promotion Rules: The Case of Internal Promotion," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 27-41, January.
- Fredrik Carlsson & Olof Johansson-Stenman & Peter Martinsson, 2007.
"Do You Enjoy Having More than Others? Survey Evidence of Positional Goods,"
London School of Economics and Political Science, vol. 74(296), pages 586-598, November.
- Carlsson, Fredrik & Johansson-Stenman, Olof & Martinsson, Peter, 2003. "Do You Enjoy Having More Than Others? Survey Evidence of Positional Goods," Working Papers in Economics 100, University of Gothenburg, Department of Economics.
- repec:rje:randje:v:37:y:2006:3:p:521-542 is not listed on IDEAS
- Frank, Robert H., 2008. "Should public policy respond to positional externalities?," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1777-1786, August.
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-348, June.
- George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 921-955.
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