Nonpromotion Signals and Job Tenure: Theory and Evidence

Change at Home, in the Labor Market, and On the Job

ISBN: 978-1-83909-933-5, eISBN: 978-1-83909-932-8

ISSN: 0147-9121

Publication date: 23 November 2020

Abstract

This chapter studies the negative signals associated with nonpromotion. I first show theoretically that, when workers' productivity rises little with additional years on the same job level, the negative signal associated with nonpromotion leads to wage decreases. On the other hand, when additional job-level tenure leads to a sizable increase in productivity, workers' wages increase. I then test my model's predictions using the personnel records from a large US firm from 1970–1988. I find a clear hump-shaped wage-job-tenure profile for workers who stay at the same job level, which supports my model's prediction.

Keywords

Acknowledgements

Acknowledgment

I thank Michael Waldman, Kevin Hallock, Matthew Freedman, Victoria Prowse, Jed DeVaro, Julie Wulf, John Abowd, two anonymous referees and the Editors Sol Polachek and Kostas Tatsiramos, and the seminar participants at Cornell University and the University of South Florida for their generous comments. I thank Michael Gibbs for generously sharing his data for this study.

Citation

Jin, X. (2020), "Nonpromotion Signals and Job Tenure: Theory and Evidence", Polachek, S.W. and Tatsiramos, K. (Ed.) Change at Home, in the Labor Market, and On the Job (Research in Labor Economics, Vol. 48), Emerald Publishing Limited, pp. 223-252. https://doi.org/10.1108/S0147-912120200000048007

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