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Joint Labor Economics and Strategy & Business Economics Workshop: Danielle Li

Monday, April 8, 2019 at 11:40am to 1:10pm

Ives Hall, 115
B07 Tower Rd, Ithaca, NY 14853, USA

Danielle Li , MIT

Promotions and the Peter Principle
Alan Benson, Danielle Li, and Kelly Shue*

Abstract: The best worker is not always the best candidate for manager. In these cases, do firms promote the best potential manager or the best worker in her current job? Using microdata on the performance of sales workers at 131 firms, we find evidence consistent with the "Peter Principle," which predicts that firms prioritize current job performance in promotion decisions at the expense of other observable characteristics that better predict managerial performance. We estimate that the costs of promoting workers with lower managerial potential are high, suggesting either that firms are making inefficient promotion decisions or that the benefits of promotion-based incentives are great enough to justify the costs of managerial mismatch.

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Event Type

Conference/Workshop, Seminar

Departments

Economics

Tags

economics, EconSeminar, EconLabor, EconStratBus

Hashtag

#CornellEcon

Contact E-Mail

hra27@cornell.edu

Contact Name

Heather LaCombe

Contact Phone

607-255-4424

Speaker

Danielle Li

Speaker Affiliation

MIT

Dept. Web Site

http://economics.cornell.edu/

Open To

Cornell Economics Community (List Serve Members)