Essays on compensation structures and human capital migration

This work focuses on compensation systems and migration patterns of high skilled labor. The first two chapters analyze compensation structures prevalent in internal labor markets. In particular, this part investigates tournaments and delayed payment schemes. The third chapter looks at the impact of fiscal policies on the interstate migration of human capital. The unifying theme of these essays is human capital, its rate of return, and its dynamics in a world with a public sector.; The first chapter investigates the hypothesis that faculty promotions and compensation in institutions of higher education are determined on the basis of rank-order tournaments. A panel data set of economics professors from the Big Ten economics departments is used. Findings suggest that the performance-based ordinal ranking of economics faculty within their department has an impact on their salary. Higher wage differentials among grade levels appear to drive larger productivity differentials and increase incentives for self-promotion. Finally, evidence shows that people of higher perceived ability have lower probabilities of being promoted. This finding is interpreted as evidence of the handicapping phenomenon that arises in heterogeneous tournaments.; The second chapter investigates delayed-payment schemes in the same internal labor market characterized by high skilled employees. The findings in this chapter reject the human capital theory explanation of steep wage-experience profiles resulting from human capital accumulation over time, in favor of the hypothesis that such profiles are a result of long-term incentive-compatible contracts.; The first two chapters indicate that mobility affects the findings on the compensation structure. The third chapter, therefore, moves away from compensation of high skilled labor and looks at the migration patterns of human capital in a world with a public sector. This part employs Census data to assess the impact of local fiscal policies on the interstate migration of human capital. The literature on human-capital investment, mobility, and local public goods provision claims that high tax rates on labor in a state will induce a migration of skilled labor among identical jurisdictions. Findings suggest that higher average income-tax and sales-tax rates in the host state negatively affect migration rates of skilled labor. With respect to public spending on education, the data show that a higher share of education spending is associated with lower migration rates of high-skilled labor.