TY  - GEN
AB  - We study optimal promotion decisions of hierarchical firms, with one junior and one
senior managerial position, which interact in a search and matching labor market. Workers
acquire experience over time while being employed in a junior position and the firm has to
determine the experience level at which the worker receives a promotion which allows her to
fill a senior position. Promoted workers move to the senior position in their current firrm, if
it is vacant, otherwise they search for senior positions on the market. The promotion cut-offs of the competing firms exhibit strategic complementarity, but we show that generically a
unique stable symmetric general equilibrium exists. If workers have homogeneous skills, then
an increase in the skill level induces faster promotion. In the presence of two skill levels in the
work force an increase of the fraction of high skilled leads to slower promotion of both types
of workers, where the promotion threshold for high skilled workers is substantially below that
for low skilled workers. This implies earlier promotions of high skill workers compared to
the low skilled consistent with available empirical evidence. Finally, we show that inserting
pyramidal firms, which have twice as many junior than senior positions, into the market
induces all firms to promote later. Pyramidal firms in equilibrium promote substantially
later than vertical firms which is supported by the existing empirical findings. The paper
also makes a methodological contribution by combining search and matching theory with
simulations in order to characterize the general equilibrium promotion cut-offs in a market
setting with heterogeneous hierarchical firms.
DA  - 2019
DO  - 10.4119/unibi/2934690
KW  - promotions
KW  - theory of the firm
KW  - search and matching labour market
KW  - organizational hierarchies
KW  - job-to-job mobility
KW  - simulation
KW  - etace_WP
LA  - eng
PY  - 2019
SN  - 2196-2723
TI  - Optimal Promotions of Competing Firms in a Frictional Labour Market with Organizational Hierarchies
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29346908
Y2  - 2024-11-22T04:48:20
ER  -