Enriching a Theory of Wage and Promotion Dynamics Inside Firms
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4324-03.pdf
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Author(s)
Gibbons, Robert
Waldman, Michael
Date Issued
August 1, 2003
Series/Report no.
MIT Sloan School of Management Working Paper;4324-03
IWER Working Paper No.;07-2003
Abstract
In previous work we showed that a model that integrates job assignment,
human-capital acquisition, and learning can explain several empirical findings
concerning wage and promotion dynamics inside firms. In this paper we extend that
model in two ways. First, we incorporate schooling into the model and derive a
number of testable implications that we then compare with the available empirical
evidence. Second, and more important, we show that introducing "task-specific"
human capital allows us to produce cohort effects (i.e., the finding that a cohort that
enters a firm at a low wage will continue to earn below-average wages years later).
We argue that task-specific human capital is a realistic concept and may have many
important implications. We also discuss limitations of our (extended) approach
Subjects
Wage Dynamics
Promotion Dynamics
Human Capital
Persistent DSpace Link
