NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Incentives and Careers in Organizations

Robert Gibbons

NBER Working Paper No. 5705 (Also Reprint No. r2158)
Issued in August 1996
NBER Program(s):   LS

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.

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Document Object Identifier (DOI): 10.3386/w5705

Published: Advances in Economics and Econometrics: Theory and Applications, ed. D.Kreps and K. Wallis, Cambridge University Press, 1995.

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