Experiments on internal promotion and external hiring

The submitted thesis “Experiments on Internal Promotion and External Hiring” investigates the role of group identity as a factor in the Employer’s decision to promote an internal candidate or to hire an external candidate for a vacant position. In a series of three novel economic laboratory experiments, this thesis investigates the role of group identity in isolation and extends the scarce literature on post-promotion effort of Workers. Furthermore, the thesis makes a methodological contribution with regards to the framing of experiments. Study 1 finds the most Employers to consider their own earnings first and to favor in-group candidates only if this is not costly to them. Study 2 demonstrates an increase in experimental control when instructions contextually relevant to the labor market are used instead of neutrally framed instructions. Study 3 shows the Employers to have higher effort expectations from the in-group Workers and to promote accordingly. There is, however, no significant difference between the effort provided by the promoted in-group Workers and the promoted out-group Workers. The role of participants' beliefs is discussed for all three studies, as are the managerial and policy implications of the results.