We suggest a parsimonious dynamic agency model in which workers have status concerns. A firm is a promotion hierarchy in which a worker's status depends on past performance. We investigate the optimality of two types of promotion hierarchies: (i) internal labor markets, in which agents have a...

We propose a theory that emphasizes the role of managers for the production and allocation of human capital in firms. Managers invest time to train junior employees, and acquire information about the juniors' abilities that is valuable for job assignments. This dual role of managers matters...

We suggest a parsimonious dynamic agency model in which workers have status concerns. A firm is a promotion hierarchy in which a worker's status depends on past performance. We investigate the optimality of two types of promotion hierarchies: (i) internal labor markets, in which agents have a...