Wage dynamics and promotions inside and between firms

We focus on the dynamic relation between wage increases, promotions and job changes. In the empirical analyses, we use the Portuguese-matched employer-employee data Quadros de Pessoal. We find substantial wage returns to both promotions and job-to-job transitions. Our results are not consistent with models of full information and symmetric learning in a competitive and frictionless market. This might suggest that there is asymmetric information. An alternative explanation is that workers might search for a good match. Finally, we show that employer-reported promotions differ to a large extent from changes in hierarchical levels. © 2010 The Author(s).