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36 J. L. Econ. & Org. 1 (2020)

handle is hein.journals/jleo36 and id is 1 raw text is: JLEO, V36N1 1 Lateral Moves, Promotions, and Task-Specific Human Capital: Theory and Evidence Xin Jin* University of South Florida Michael Waldman Cornell University This paper studies the link between lateral mobility and promotions. The first part of the paper extends the theoretical literature by incorporating lateral moves into a job assignment model with task-specific human capital accumulation. The model thus predicts that workers who are laterally moved in one period are more likely to be subsequently promoted and experience larger wage growth compared with workers who are not laterally moved. In addition, workers with very high levels of education are less likely to be laterally moved compared with workers with lower levels of education. We test the model's predictions using a large employer-employee linked panel dataset on senior managers in a sample of large US firms during the period 1981 to 1985. Our findings support the the- oretical predictions and show the importance of lateral mobility in wage and promotion dynamics. (JEL J31, M51) 1. Introduction Most studies of careers inside firms focus on worker movements across different job levels, that is, promotions (see, e.g., Rosen 1982; Prendergast 1993; Gibbons and Waldman 1999). However, there is substantial evi- dence that suggests that lateral mobility, that is, movements between jobs at the same job level, is very common. For example, Saari et al. (1988) surveyed 1000 randomly selected firms in the United States and find that over 40% of the organizations use horizontal moves in their We thank Kevin Hallock, Matthew Freedman, Benjamin Friedrich, Victoria Prowse, Damon Clark, Francine Blau, Lawrence Kahn, Richard Mansfield, Henry Schneider, the Editor, Rocco Macchiavello, two anonymous referees, and seminar and conference partici- pants at Cornell University, Goethe University Frankfurt, Seoul National University, University of Illinois, University of Leicester, University of South Florida, University of Toronto, the SAEe conference, the Royal Economic Society conference, the SOLE confer- ence, the NBER Summer Institute, Personnel Economics, and the NBER Organizational Economics Group Meetings for helpful comments. Special thanks go to John Abowd and Michael Bognanno for help in obtaining the data used in the study. The data used in this paper are confidential and housed by the Cornell Restricted Access Data Center (CRADC). *Department of Economics, University of South Florida, Tampa, FL, USA. Email: xjin@usf.edu. The Journal of Law, Economics, and Organization, Vol. 36, No. 1 doi:10.1093/jleo/ewz017 Advance Access published August 27, 2019 © The Author(s) 2019. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oup.com

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