Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311971 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17532
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper explores the economic effects of imperfect meritocracy in recruitment and career advancement. We compare two career promotion mechanisms: a fully meritocratic system and a "noisy" one, that allows less productive workers to advance. Our model shows that imperfect meritocracy in promotions can boost worker effort through the "hope effect," potentially leading to higher aggregate output and total welfare compared to a strictly meritocratic system. Less skilled workers benefit most under this scenario, while the high skilled are worse off. We conclude that when perfect meritocracy in recruitment is unattainable, it may not be optimal to enforce it in career advancement, offering insights for economic policy.
Subjects: 
meritocracy
efficiency
recruitment
career advancement
JEL: 
A13
D61
D63
J20
M51
Document Type: 
Working Paper

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