Learning about Quality: How the Quality of Military Personnel Is Revealed over Time

By James R. Hosek; Michael G. Mattock | Go to book overview

Chapter Two
PREVIOUS STUDIES AND PERSONNEL QUALITY INDICATORS
In this chapter, we review literature from two areas of study: (1) the wage and promotion dynamics of internal labor markets, where we concentrate on the paper by Gibbons and Waldman (1999), and (2) promotion in the military. Gibbons and Waldman (hereafter, GW) argued that the process of learning about worker ability must be a part of any model capable of explaining the features of wage change and promotion observed in internal labor markets. Although findings in empirical work were the motivation for their model, none of the studies they survey produces estimates of the importance of learning about ability. Our analysis of military promotions produces such estimates, although—unlike GW—we interpret our results as reflecting the quality of job match between the member and the service rather than “ability.” Because we analyze military data, we survey a number of studies of military promotion. However, with the exception of Ward and Tan (1985), these studies did not estimate learning about quality.We also present charts on military promotion. The charts illustrate how promotion speed differs by military service, by cohort, by occupation, and by AFQT, though much less so by HSDG. The lack of a relationship to HSDG occurs because most enlisted personnel are high school graduates, making it difficult to observe much difference between HSDG and non-HSDG personnel. The fact that promotion speed differs by service, cohort, and occupation means that in applying a model that depends on a member's promotion speed relative to the promotion speed of peers, we should group the data by service, cohort, and occupation. Our model includes AFQT as an explanatory variable.
INTERNAL LABOR MARKETS
Gibbons and Waldman summarized the findings of empirical research on internal labor markets. They identified Baker, Gibbs, and Holmstrom (1994a,b) (hereafter, BGH) as the most comprehensive empirical assessment of wage and promotion outcomes in internal labor markets in private organizations. Because the findings in BGH are consistent with the findings of other empirical studies that are narrower in scope, GW focused their discussion on BGH. BGH found the following:
Real wage decreases occur infrequently, and demotions are rare.
A worker's wage increases are serially correlated, as are promotion speeds.

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Learning about Quality: How the Quality of Military Personnel Is Revealed over Time
Table of contents

Table of contents

  • Title Page *
  • Preface iii
  • Contents v
  • Figures vii
  • Tables ix
  • Summary xi
  • Acknowledgments xv
  • Abbreviations xvii
  • Chapter One - Introduction 1
  • Chapter Two - Previous Studies and Personnel Quality Indicators 5
  • Chapter Three - A Bayesian Model of Service Member Quality 17
  • Chapter Four - Model Implementation 27
  • Chapter Five - Data and Empirical Results 39
  • Chapter Six - Conclusions 55
  • Appendix A - Standardization and Comparison Between Groups 61
  • Appendix B - Analysis Tables 69
  • Appendix C - Parameter Estimates 85
  • Bibliography 107
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