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Incentives and Earnings Growth

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The career prospects of newly recruited employees differ substantially within an organization. The stars experience considerable growth in earnings; others can hardly maintain their entry salaries. This article sheds light on the mechanisms generating the observed heterogeneity in earnings growth by investigating the effects that explicit short-run incentives and implicit incentives have on earnings growth. The model’s predictions are tested using personnel records from a large bank and are found to be consistent with the observed earnings growth during the first half of the employees’ careers.
Original languageEnglish
JournalJournal of Economic Behavior & Organization
Volume85
Issue1
Pages (from-to)97-107
ISSN0167-2681
DOIs
Publication statusPublished - 2013

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