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| 1 |
ID:
187840
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| Summary/Abstract |
This paper shows the optimality of a two-tier linear salary scheme in internal labor markets and identifies conditions under which discretionary promotion is better than rule-based promotion and vice versa. Our main findings are: (1) regardless of whether discretionary promotion or rule-based promotion is used, a two-tier salary scheme is optimal; (2) the salary is contingent on promotion, which is fixed before and linear after promotion; (3) if the difference in human capital among agents is small, discretionary promotion is superior; (4) if the expected replacement cost of human capital is high, discretionary promotion is superior; (5) if the risk of facing/incurring a high replacement cost of human capital is high, discretionary promotion is superior; (6) if the chance of having a high human capital agent is high, rule-based promotion is likely to be superior; and (7) if the productivity improvement from a job promotion is large, rule-based promotion is likely to be superior. We have also found empirical evidence in support of our theory on the two-tier salary scheme.
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| 2 |
ID:
116526
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| Publication |
2012.
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| Summary/Abstract |
Most privatizations around the world take the form of staged privatization with multistage lockups and step-by-step unlocking of shares. A lockup prevents the shares of a company from being sold to the public for a specified or unspecified period of time. This paper presents a theory and provides empirical evidence for staged privatization under market forces. The theory is based on a specification of a lockup effect on demand, where the existence of this lockup effect is shown by our empirical analysis. With this theory, we can analyze how various factors, such as the lockup effect, demand elasticity, growth potential and business fluctuations, affect staged privatization, in particular, the equilibrium speed of privatization. Our paper is the first to analyze a market-oriented, multistage privatization process, instead of a fully government-controlled or centrally planned process. Interestingly, staged privatization resembles initial public offerings (IPOs). Hence, our study can shed light on IPOs from a unique angle. Our empirical analysis provides evidence in support of our theoretical findings.
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