Massimiliano Bratti and Stefano Staffolani
The purpose of this paper is to describe the hypothesis of effort‐based career opportunities as a situation in which profit maximising firms create incentives for employees to…
Abstract
Purpose
The purpose of this paper is to describe the hypothesis of effort‐based career opportunities as a situation in which profit maximising firms create incentives for employees to work longer hours than the bargained ones, by making career prospects depend on working hours. The paper aims to test some implications of this hypothesis using UK data.
Design/methodology/approach
The empirical analysis uses the British Household Panel Survey (BHPS) and panel data estimators to investigate the existence of a robust correlation between working hours and workers' expected probability of promotion in the current job.
Findings
The analysis shows the existence of a robust positive correlation between working time and workers' expected likelihood of promotion in the BHPS data even when controlling for several individual characteristics and for workers' unobserved heterogeneity.
Research limitations/implications
Although the paper uses panel data, the BHPS does not allow for the identification of the firms in which individuals work, and therefore to control for firm fixed effects. Employer‐employee datasets would have allowed a better assessment of the hypothesis.
Originality/value
The paper provides a theoretical explanation for the empirically observed positive association between working time and expected promotion probability and, unlike previous papers that used pooled OLS estimates, it exploits the panel structure of BHPS data to control for individual unobserved heterogeneity.
Details
Keywords
Solomon W. Polachek and Konstantinos Tatsiramos
Early models of the functional distribution of income assume constant labor productivity among all individuals. Not until human capital theory developed did scholars take into…
Abstract
Early models of the functional distribution of income assume constant labor productivity among all individuals. Not until human capital theory developed did scholars take into account how productivity varied across workers. According to early human capital models, this variation came about because each individual invested differently in education and training. Those acquiring greater amounts of schooling and on-the-job training earned more. However, these models neglected why one person would get training while another would not. One explanation is individual heterogeneity. Some individuals are smarter, some seek risk, some have time preferences for the future over the present, some simply are lucky by being in the right place at the right time, and some are motivated by the pay incentives of the jobs they are in. This volume contains 10 chapters, each dealing with an aspect of earnings. Of these, the first three deal directly with earnings distribution, the next four with job design and remuneration, the next two with discrimination, and the final chapter with wage rigidities in the labor market.