【Talk & Lecture】Firm Growth and Promotion OpportunitiesPublished： 05/08/2019
Date: May.13th, 2019
Speaker: KE Rongzhu
Venue: Room 418, School of Economics, Yuquan Campus
KE Rongzhu received his Ph.D in economics from Massachusetts Institute of Technology, USA, in 2009. He is currently working in Department of Economics, Hong Kong Baptist University. His research focuses on incentive problems facing firms and organizations. His current research revolves around three areas: contract theory, mechanism design and organizational economics, and applied econometrics. He has published several papers on international journals such as Journal of Labor Economics, Theoretical Economics, and Operation Research.
We develop a model in which a firm makes a sequence of production decisions and has to motivate each of its employees to exert effort. The firm motivates its employees through incentive pay and promotion opportunities, which may differ across different cohorts of workers. We show that the firm benefits from reallocating promotion opportunities across cohorts, resulting in an optimal personnel policy that is seniority-based. We also highlight a novel time-inconsistent motive for firm growth: when the firm adopts an optimal personnel policy, it may pursue future growth precisely to create promotion opportunities for existing employees.