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 214 firms, we find evidence consistent with the “Peter Principle,” which...

This paper surveys two related pieces of the labor-economics literature: incentive pay and careers in organizations. In the discussion of incentives, I first summarize theory and evidence related to the classic agency model, which emphasizes the tradeoff between insurance and incentives. I then...

Although economic models of training decisions are framed in terms of a company's calculation of the costs and benefits of such training, empirical work has never been able to test this model directly on company behavior. This paper utilizes a unique database to analyze the determinants of the...

This paper studies the forces which determine how diversity at a firm evolves over time. We consider a dynamic model o a single firm with two levels of employees, the entry level and the upper level. In each period, the firm selects a subset of the entry-level workers for promotion to the upper...

The Clinton administration has made job training and skill upgrading a major priority. Secretary of Labor Robert Reich has already presented a bold program for skill enhancement drawing on a new consensus in certain circles of the social science and policy communities about the need to upgrade...

This paper utilizes data on the personnel policies and economic characteristics of businesses in the manufacturing sector to study the relationship between employee training and labor productivity. The major finding is that businesses that were operating below their expected labor productivity...

This paper is an econometric analysis of the on-the-job training (OJT) decisions of a group of white American males during 1975. The data are obtained from the Panel Study of Income Dynamics, which asked a very careful series of questions concerning the individual's OJT status. Each individual's...

Most analyses of teacher quality end without any assessment of the economic value of altered teacher quality. This paper combines information about teacher effectiveness with the economic impact of higher achievement. It begins with an overview of what is known about the relationship between...