MPC Member Publications

This database contains a listing of population studies publications written by MPC Members. Anyone can add a publication by an MPC student, faculty, or staff member to this database; new citations will be reviewed and approved by MPC administrators.

Full Citation

Title: Promotions and the peter principle

Citation Type: Journal Article

Publication Year: 2019

ISSN: 15314650

DOI: 10.1093/qje/qjz022

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 their current job? Using microdata on the performance of sales workers at 131 firms, we find evidence consistent with the Peter Principle, which proposes 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. We find that firms manage the costs of the Peter Principle by placing less weight on sales performance in promotion decisions when managerial roles entail greater responsibility and when frontline workers are incentivized by strong pay for performance.

Url: https://academic.oup.com/qje/article/134/4/2085/5550760

User Submitted?: No

Authors: Benson, Alan; Li, Danielle; Shue, Kelly

Periodical (Full): Quarterly Journal of Economics

Issue: 4

Volume: 134

Pages: 2085-2134

Countries:

IPUMS NHGIS NAPP IHIS ATUS Terrapop