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The Signalling Role of Promotion in Japan

Author

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  • Kazuaki Okamura

    (Department of Economics and Social Sciences, Faculty of Humanities and Economics, Kochi University)

Abstract

Under asymmetric information conditions regarding worker productivity between current and prospective employers, a worker's promotion signals his/her productivity. In this Paper, we tested the signalling role of promotion, using Japanese micro-level data. We found that among lower-level positions, promotion seems to signal a worker's ability, and both the business cycle and foreign-capital ratio of his/her company significantly strengthen this effects. These results suggest that external labour market conditions (i.e. asymmetric information regarding a worker's abilities between a current and prospective employer) affect the economic differences among workers in the internal labour market.

Suggested Citation

  • Kazuaki Okamura, 2011. "The Signalling Role of Promotion in Japan," Discussion Papers 1112, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1112
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2011/1112.pdf
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    References listed on IDEAS

    as
    1. 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.
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    7. Francine D. Blau & Jed DeVaro, 2006. "New Evidence on Gender Differences in Promotion Rates: An Empirical Analysis of a Sample of New Hires," Working Papers 891, Princeton University, Department of Economics, Industrial Relations Section..
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    11. Ishida, Junichiro, 2004. "Signaling and strategically delayed promotion," Labour Economics, Elsevier, vol. 11(6), pages 687-700, December.
    12. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 91-147.
    13. Ariga,Kenn & Brunello,Giorgio & Ohkusa,Yasushi, 2010. "Internal Labour Markets in Japan," Cambridge Books, Cambridge University Press, number 9780521142748.
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    Cited by:

    1. Michael Waldman & Ori Zax, 2016. "An Exploration of the Promotion Signaling Distortion," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(1), pages 119-149.
    2. Jed DeVaro & Oliver Gürtler, 2020. "Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 335-376, April.
    3. Cassidy, Hugh & DeVaro, Jed & Kauhanen, Antti, 2016. "Promotion signaling, gender, and turnover: New theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 140-166.

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    More about this item

    Keywords

    Strategically delayed promotion; Signalling; Wage growth; Japan.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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