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Lateral Moves, Promotions, and Task-Specific Human Capital: Theory and Evidence

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  • Xin Jin
  • Michael Waldman

Abstract

This paper studies the link between lateral mobility and promotions. The first part of the paper extends the theoretical literature by incorporating lateral moves into a job assignment model with task-specific human capital accumulation. The model thus predicts that workers who are laterally moved in one period are more likely to be subsequently promoted and experience larger wage growth compared with workers who are not laterally moved. In addition, workers with very high levels of education are less likely to be laterally moved compared with workers with lower levels of education. We test the model’s predictions using a large employer–employee linked panel dataset on senior managers in a sample of large US firms during the period 1981 to 1985. Our findings support the theoretical predictions and show the importance of lateral mobility in wage and promotion dynamics.

Suggested Citation

  • Xin Jin & Michael Waldman, 2020. "Lateral Moves, Promotions, and Task-Specific Human Capital: Theory and Evidence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 36(1), pages 1-46.
    • Handle: RePEc:oup:jleorg:v:36:y:2020:i:1:p:1-46.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewz017
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    Citations

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    Cited by:

    1. Kenta Kojima & Katsuya Takii, 2023. "Job Value: New Measure of Career Success Potential from a Job," OSIPP Discussion Paper 23E001, Osaka School of International Public Policy, Osaka University.
    2. Ori Zax, 2020. "Human capital acquisition as a competitive response to the promotion distortion," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 496-509, July.
    3. WANG Liya & KAWATA Yuji & TAKAHASHI Kohei, 2024. "Peer Effects in Human Capital Investment Decisions and Gender Differences," Discussion papers 24055, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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