Incentives and Careers in Organizations
Robert S. Gibbons
Massachusetts Institute of Technology - Sloan School and Department of Economics; National Bureau of Economic Research (NBER)
This paper surveys two related pieces of the labor-economics literature: incentive pay and careers in organizations. In the discussion of incentives, I first summarize theory and evidence related to the classic agency model, which emphasizes the tradeoff between insurance and incentives. I then offer econometric and case-study evidence suggesting that this classic model ignores several crucial issues and sketch new models that begin to analyze these issues. In the discussion of careers in organizations, I begin by summarizing evidence on wages and positions using panel data within firms. This evidence is sparse and far-flung (drawn from industrial relations, organizational behavior and sociology, as well as from labor economics); I identify ten basic questions that merit more systematic investigation. Turning to theory, I describe building-block models that address one or a few pieces of evidence but focus on more recent models that address broad patterns of evidence.
Number of Pages in PDF File: 36
JEL Classification: J33, J41, D8working papers series
Date posted: October 24, 1996
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