Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area

Belzil, Christian, Bognanno, Michael and Poinas, François (2018) Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area. Research in Labor Economics, 46. pp. 73-106.

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This chapter estimates a dynamic reduced-form model of intra-firm promotions using an employer–employee panel of over 300 of the largest corporations in the United States in the period from 1981 to 1988. The estimation conditions on unobserved individual heterogeneity and allows for both an endogenous initial condition and sample attrition linked to individual heterogeneity in demonstrating the relative importance of variables that influence promotion. The role of the executive’s functional area in promotion is considered along with the existence and source of promotion fast tracks. We find that while the principal determinant of promotions is unobserved individual heterogeneity, functional area has a high explanatory power, resulting in promotion probabilities that differ by functional area for executives at the same reporting level and firm. No evidence is found that an executive’s recent speed of advancement in pay grade has a positive causal impact on in-sample promotions after conditioning on the executive’s career speed of advancement, except for the lowest level executives the data. Fast tracks appear to largely result from heterogeneity in persistent individual characteristics, not from an inherent benefit in recent advancement itself.

Item Type: Article
Language: English
Date: 2018
Refereed: Yes
Uncontrolled Keywords: promotion, fast track, functional area, dynamic discrete choice
JEL codes: C33 - Models with Panel Data
M5 - Personnel Economics
M51 - Firm Employment Decisions; Promotions (hiring, firing, turnover, part-time, temporary workers, seniority issues)
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 27 Aug 2018 13:14
Last Modified: 31 May 2019 09:49

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