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Job Responsibility, Pay and Promotion

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  • Manove, Michael

Abstract

How are pay and promotion prospects related to job responsibility? A job entails responsibility to the extent that the value of the job outcome is sensitive to the worker's input of effort. In the author's model, an employer uses termination contracts to elicit effort from workers. The optimal wage increases with responsibility. The author shows that the employer can reduce incentive costs by structuring a job ladder and offering workers a self-enforcing prospect of promotion. In fact, the employers will choose to pay differentiated wages to identical workers in identical jobs, promoting workers from the lower-paying to the higher-paying positions as vacancies occur. Copyright 1997 by Royal Economic Society.

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  • Manove, Michael, 1997. "Job Responsibility, Pay and Promotion," Economic Journal, Royal Economic Society, vol. 107(440), pages 85-103, January.
    • Handle: RePEc:ecj:econjl:v:107:y:1997:i:440:p:85-103
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    Cited by:

    1. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 67-87.
    2. Bas Klaauw & António Dias da Silva, 2011. "Wage dynamics and promotions inside and between firms," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1513-1548, October.
    3. Lima, Francisco & Pereira, Pedro T., 2001. "Careers and Wage Growth within Large Firms," IZA Discussion Papers 336, Institute of Labor Economics (IZA).
    4. Dirk Sliwka, 2006. "On the Notion of Responsibility in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(2), pages 523-547, October.
    5. Florian Engl, 2022. "A Theory of Causal Responsibility Attribution," CESifo Working Paper Series 9898, CESifo.
    6. C. Sofia Machado & Miguel Portela, 2011. "Age and opportunities for promotion," NIPE Working Papers 03/2011, NIPE - Universidade do Minho.
    7. Jiang, Kun & Wang, Susheng, 2022. "Internal labor markets with two types of promotion and two tiers of salary: theory and evidence from China," China Economic Review, Elsevier, vol. 72(C).
    8. repec:eee:labchp:v:3:y:1999:i:pb:p:2291-2372 is not listed on IDEAS
    9. Francisco Lima, 2000. "Internal labour markets: a case study," Nova SBE Working Paper Series wp378, Universidade Nova de Lisboa, Nova School of Business and Economics.
    10. Alexandru Trifu, & Ariadna-Ioana Juravle (Gavra), & Loredana Terec-Vlad, 2017. "The Economic And Philosophical Implications Of The Concept Of Responsibility," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(1), pages 1-17, January.

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