DP13828 Motivating employees through career paths

Author(s): Heski Bar-Isaac, Raphaël Levy
Publication Date: June 2019
Keyword(s): career concerns, Labour market competition, professional service firms, task assignments
JEL(s): J32, J33, M12, M5
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13828

Firms have discretion over task allocations, which may dampen employees' career prospects, and, hence, motivation. Task assignments and worker motivation interact through the extent of labor market competition; that is, the possibility of moving to another firm. More competition enhances motivation but decreases firms' incentives to assign workers to informative tasks. One consequence is that competitive firms sometimes choose strategies that lead to intermediate competition. When the employee pool is heterogeneous, firms might choose different human resources practices that attract different kinds of workers, and differentiate themselves through the career opportunities within and beyond the firms that they offer.