Prestige, promotion, and pay

Ferreira, Daniel and Nikolowa, Radoslawa (2023) Prestige, promotion, and pay. Journal of Finance. ISSN 0022-1082 (In Press)

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Abstract

We develop a theory in which financial (and other professional services) firms design career structures to “sell” prestigious jobs to qualified candidates. Firms create less-prestigious entry-level jobs, which serve as currency for employees to pay for the right to compete for the more prestigious jobs. In optimal career structures, entrylevel employees (“associates”) compete for better paid and more prestigious positions (“managing directors” or “partners”). The model provides new implications relating job prestige to compensation, employment, competition, and the size of the financial sector.

Item Type:	Article
Additional Information:	© 2023 Wiley.
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance H Social Sciences > HD Industries. Land use. Labor H Social Sciences
JEL classification:	L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General G - Financial Economics > G2 - Financial Institutions and Services > G20 - General
Date Deposited:	09 Mar 2023 11:30
Last Modified:	15 Sep 2023 17:31
URI:	http://eprints.lse.ac.uk/id/eprint/118369

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