Wage structure and the incentive effect of promotions van Herpen, M.; Cools, K.; van Praag, C.M. Link to publication Citation for published version (APA): van Herpen, M., Cools, K., & van Praag, C. M. (2004). Wage structure and the incentive effect of promotions. Unknown Publisher. General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless

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... the work is under an open content license (like Creative Commons). Abstract This paper studies wage structure characteristics and their consequent incentive effects empirically. Based on personnel records and an employee survey, we provide evidence that wages are attached to jobs and that promotions play a dominant role as a wage determinant. Our findings indicate furthermore that a promotion affects both intrinsic and extrinsic motivation significantly, though in two different ways: an expected promotion increases extrinsic motivation whereas intrinsic motivation is highest subsequent to a realized promotion. The relationship between extrinsic motivation and expected promotions implies that promotions have a clear incentive effect, consistent with a key -not yet testedassumption of the tournament model.