A tale of two risks? An integrated analysis of the determinants of promotions and firm separations in Portugal

Publication type

Conference Paper


Panel Data 2006: 13th International Conference on Panel Data: 7-9 July 2006 Faculty of Economics, University of Cambridge UK


Publication date

June 1, 2006


This study focuses on the determinants of mobility of workers within and between firms
and adds to the existing literature in two distinct ways. First, we study the determinants of promotions and firm separations. Second, the use of matched employer-employee data allows us to relate job mobility to both worker and firm characteristics. Furthermore, although collective agreements, the usual way of regulating employment relationships in Portugal, make provisions for within firm career progress analysis of job mobility in Portugal are rare.
Economic theories have long addressed the mechanisms generating labour mobility, within and between firms. Following the theoretical development of the topic, many empirical studies have tried to assess the determinants of promotions and separations from firms and whether these determinants differ across genders. However, most studies analyse promotions and job-to-job transitions separately. This makes the comparison of the effects of different characteristics on each type of job mobility difficult. In this paper we study the determinants of promotions within a firm and separations from a firm jointly. Hence, we are able to compare the determinants of mobility of workers within and between firms. The use of the Portuguese longitudinal matched employer-employee data set allows us to include a range of individual and firm characteristics in our specifications. The latter are often ignored in the literature, yet promotions
in particular are based entirely on firm-level decisions. Furthermore, while in the previous
literature it is common to differentiate mobility between firms by their type, whether they are initiated by workers (quits) or firms (layoffs), it is less common to distinguish between types of promotions, i.e. whether they are due to merit or seniority. In our analysis we test the empirical relevance of distinguishing between automatic and merit promotions, and between separations resulting in short-term non-employment and those resulting in longer term non-employment.
The distinction between types of promotion, made in our study, proved fruitful as it seems to explain gender differences in promotion probabilities. We show that the impact of gender on promotions depends crucially on how promotions are defined. Women are more likely than men to receive automatic promotions, but as likely to receive merit promotions. The chance of experiencing movements between firms is smaller for women than for men. The effect of education depends on the type of promotion considered. The level of education is only a factor for automatic promotions and not for promotions that involve a change in the tasks performed. This suggests that automatic promotions may be actually reflecting some appraisal of the abilities of workers made by the employers, and supports the view that a promotion, understood as a form of career progress that involves a greater commitment of workers with their firms, may not necessarily involve a change in the tasks performed. We are also able to verify the importance of the firm in the mobility process. We found that there is more variability in firms regarding promotions than in separations. This emphasizes that promotions are mainly a decision of the employer, and suggests that studies that do not control for firm characteristics when analysing within firm career progress provide only a limited perspective.



- http://www.econ.cam.ac.uk/panel2006/detailprog.html

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