DP1622 Fast Track: Is it in the Genes? The Promotion Policy of a Large Japanese Firm

Author(s): Kenn Ariga, Giorgio Brunello, Yasushi Ohkusa
Publication Date: April 1997
Keyword(s): Internal Labour Market, Japanese firms, Promotion Policy
JEL(s): J4, L2
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1622

This paper studies the promotion policy of a large, hi-tech manufacturing Japanese firm. We find that the company has multiple ports of entry and hires a significant number of employees with previous job experience. In addition, cohort-peer differentiation in promotion starts much earlier than predicted by the common view, and there are clear signs of fast-track effects, so that individuals promoted faster earlier are more likely to be promoted faster later on. Fast-track effects are not in the genes, because they survive even after controlling for time-invariant individual effects, such as innate individual ability. The last result is difficult to justify using a pure learning model, where ability is time invariant, so that a richer learning model, incorporating, say, human capital considerations, is clearly required.