Promotion, Turnover, Earnings and Firm-Sponsored Training
28 Pages Posted: 7 Nov 2002
Date Written: September 2002
Abstract
Different countries display different patterns in labor mobility, promotion, earning distribution, and provision of firm-sponsored training. Although economists have developed many building-block models that allow them to analyze subsets of those labor market characteristics, few models predict what combinations of those patterns are more likely to appear or explain how institutions in a particular county affect its labor market characteristics in a systematic way. In this paper, I have developed a model in which a difference in some technological parameters lead to different equilibria with different sets of patterns in mobility, wage, and promotion dynamics. Key is the asymmetric learning of workers' characteristics. Because of the information that is conveyed to the market by promotion, firms have incentives to adopt strategic promotion policies, which result in different turnover, earnings profile and provision of firm-sponsored training. The paper explains well the differences between the Japanese and the United States internal labor markets.
Keywords: promotion, turnover, earnings profile, firm-sponsored training, asymmetric learning, signaling, job assignment, US-Japanese differences, human capital, match quality
JEL Classification: J3, J6, M5
Suggested Citation: Suggested Citation
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