Prestige, promotion, and pay

Ferreira, Daniel ORCID: 0000-0003-4590-8429 and Nikolowa, Radoslawa (2024) Prestige, promotion, and pay. Journal of Finance, 79 (1). 505 - 540. ISSN 0022-1082

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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, entry-level 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
Official URL:	https://onlinelibrary.wiley.com/journal/15406261
Additional Information:	© 2023 American Finance Association
Divisions:	Finance
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance H Social Sciences
JEL classification:	G - Financial Economics > G2 - Financial Institutions and Services > G20 - General L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
Date Deposited:	09 Mar 2023 11:30
Last Modified:	19 May 2025 04:09
URI:	http://eprints.lse.ac.uk/id/eprint/118369

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