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Title: Career and non-career jobs: Dangling the carrot Authors:  Demetris Koursaros - Cyprus University of Technology (Cyprus) [presenting]
Abstract: A model of the labor market with ``career'' and ``non-career'' jobs is developed. Non-career firms have the typical one-type job structure and pay their employees their marginal product, while in career firms, all workers start at a low rank and can be promoted to a higher rank. We show that it is optimal for career firms to compensate more the few workers that get promoted to the higher rank, thereby creating incentives for the mass of the workers in lower ranks who are paid less. We explore the macroeconomic implications of this hierarchical payment structure. We show how our model can provide interesting insights into various puzzles, such as the wage gap between men and women, the cyclicality of the labor wedge and the low volatility of the real wage relative to hours and output along the business cycle, without imposing ad-hoc nominal wage rigidities.