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An extensive theoretical literature investigates the role of promotions as a signal of worker ability. In this paper we extend the theory by focusing on how the signaling role of promotion varies with a worker’s education level, and then investigate the resulting predictions using a longitudinal data set that contains detailed information concerning the internal-labor-market history of a medium-sized firm in the financial-services industry. Our results support signaling being both a statistically significant and economically significant factor in promotion decisions. The paper also contributes to the extensive literature on the role of education as a labor-market signal.


Suggested Citation
DeVaro, J., & Waldman, M. (2009). The signaling role of promotions: Further theory and empirical evidence (CRI 2009-008). Retrieved [insert date] from Cornell University, ILR School, Compensation Research Initiative site: