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Query: faculty: "FEB" and publication year: "2004"

AuthorsM. van Herpen, K. Cools, C.M. van Praag
TitleWage structure and the incentive effect of promotions
Year2004
FacultyFaculty of Economics and Business
Institute/dept.FEB: Amsterdam School of Economics Research Institute (ASE-RI)
KeywordsPromotions; Incentives; Tournament model; Internal labor market; Extrinsic motivation
ClassificationJEL J41, J33
AbstractThis paper studies wage structure characteristics and their consequent incentive effects empirically. Based on personnel records and an employee survey, we provide evidence that wages are attached to jobs and that promotions play a dominant role as a wage determinant. Our findings indicate furthermore that a promotion affects both intrinsic and extrinsic motivation significantly, though in two different ways: an expected promotion increases extrinsic motivation whereas intrinsic motivation is highest subsequent to a realized promotion. The relationship between extrinsic motivation and expected promotions implies that promotions have a clear incentive effect, consistent with a key - not yet tested -assumption of the tournament model.
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