The Signaling Role of Promotions: Further Theory and Empirical Evidence

[Excerpt] An extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions, and then investigate the validity of these predictions using a longitudinal data set that contains detailed information concerning the internal-labor-market history of a medium-sized firm in the financial-services industry. Our results support the notion that signaling is both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the role of education as a labor-market signal

The Signaling Role of Promotions: Further Theory and Empirical Evidence (CRI 2009-008)

An extensive theoretical literature investigates the role of promotions as a signal of worker ability. In this paper we extend the theory by focusing on how the signaling role of promotion varies with a worker’s education level, and then investigate the resulting predictions using a longitudinal data set that contains detailed information concerning the internal-labor-market history of a medium-sized firm in the financial-services industry. Our results support signaling being both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the role of education as a labor-market signal

Standard Promotion Practices versus Up-or-Out Contracts (CRI 2009-001)

In most firms a worker in any period is either promoted, left in the same job, or fired (demotions are typically rare), and there is no specific date by which a promotion needs to occur. In other employment situations, however, up-or-out contracts are common, i.e., if a worker is not promoted by a certain date the worker must leave the firm. This paper develops a theory that explains why and when each of these practices is employed. Our theory is based on asymmetric learning in labor markets and incentives associated with the prospect of future promotion. Our main result is that firms employ up-or-out contracts when firm-specific human capital is low while they employ standard promotion practices when it is high. We also find that, if firms can commit to a wage floor for promoted workers and effort provision is important, then up-or-out contracts are employed when low-level and high-level jobs are similar. We believe these results are of interest because they are consistent with many of the settings in which up-or-out is typically observed such as law firms and academic institutions

Antitrust Perspectives for Durable-Goods Markets

Markets for durable goods constitute an important part of the economy. In this paper I first briefly review the microeconomic theory literature on durable-goods markets, focusing mostly on the last ten years. I then discuss a number of my own recent analyses concerning optimal antitrust policy in durable-goods markets that mostly build on ideas in the larger literature. Specific topics covered include: (i) optimal antitrust policy for durable-goods mergers; (ii) practices that eliminate secondhand markets; (iii) tying in markets characterized by upgrades and switching costs; and (iv) antitrust policy for aftermarket monopolization in durable-goods markets.

Health Care Evolves From Reactive to Proactive.

Decoding health and disease pathways drives healthcare evolution. Historically, therapeutic paradigms have relied on interventions that mitigate symptoms of established diseases. Increasingly, molecular insights into pathophysiology now provide unprecedented opportunities to offer curative solutions or even prevent disease and thereby secure longitudinal wellness. These opportunities extend past individual patients to entire populations and geographies. Moreover, they optimize prospective healthspan across lifespan. Linking discovery science and its translatable innovations beyond reactive disease intervention to proactive prevention will maximize society’s returns creating the greatest benefit for the greatest number of people globally

Clinical Pharmacology & Therapeutics: Past, Present, and Future.

Clinical Pharmacology & Therapeutics (CPT), the definitive and timely source for advances in human therapeutics, transcends the drug discovery, development, regulation, and utilization continuum to catalyze, evolve, and disseminate discipline-transformative knowledge. Prioritized themes and multidisciplinary content drive the science and practice of clinical pharmacology, offering a trusted point of reference. An authoritative herald across global communities, CPT is a timeless information vehicle at the vanguard of discovery, translation, and application ushering therapeutic innovation into modern healthcare