Perceived Income, Promotion and Incentive Effects
21 Pages Posted: 18 Feb 2002
Date Written: February 2002
This paper examines the disincentive effects of perceived underpayment on individuals' exerted effort and promotion. To this end we develop a theoretical framework and obtain empirical evidence by analyzing British academia data. We find that, tenured academics will tend to invest less effort in publishing as the difference between their perceived deserved income and actual income increases. On the other hand, for non-tenured academics this relationship is ambiguous. Our model predicts that if, however, tenured staff also derive utility directly from publication, over and above that associated with income and promotion, the difference between perceived and actual income has a smaller negative effect on the actual effort invested in research.
Keywords: Perceived Income, Underpayment, Productivity, Promotion
JEL Classification: J3, J4
Suggested Citation: Suggested Citation