Corporate Tournaments, Human Capital Acquisition, and the Firm Size-Wage Relation

35 Pages Posted: 29 Sep 2000

See all articles by Jan Zabojnik

Jan Zabojnik

Queen's University - Department of Economics

Dan Bernhardt

University of Illinois at Urbana-Champaign - Department of Economics

Date Written: September 25, 2000

Abstract

This paper provides a possible explanation for the empirically observed size-wage effect and inter-industry wage differences. It develops a model in which incentives for workers to accumulate general human capital are provided by corporate tournaments, where workers with the highest level of general human capital win promotions. Given that the prizes in such tournaments are determined by outside market conditions, the investment and the equilibrium wages depend on firm and industry characteristics. The model implies that workers in bigger firms and in more technology intensive and profitable firms and industries acquire more human capital and receive higher wages and benefits.

Keywords: Corporate tournaments, Wage dispersion, Human capital investment

JEL Classification: D82, J24, J31

Suggested Citation

Zabojnik, Jan and Bernhardt, Dan, Corporate Tournaments, Human Capital Acquisition, and the Firm Size-Wage Relation (September 25, 2000). Available at SSRN: https://ssrn.com/abstract=242093 or http://dx.doi.org/10.2139/ssrn.242093

Jan Zabojnik (Contact Author)

Queen's University - Department of Economics ( email )

94 University Avenue
Kingston, Ontario K7L 3N6
Canada
613-533-2275 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://qed.econ.queensu.ca/faculty/zabojnik/Page/

Dan Bernhardt

University of Illinois at Urbana-Champaign - Department of Economics ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
217-244-5708 (Phone)

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