A Closed Model of Careers in a Simple Hierarchy

A vertically differentiated labor market can be viewed longitudinally as careers or in cross section as hierarchy. The equilibrium structure results from simultaneous choice of careers by individuals and hierarchy by firms. We compare steady states in a model which is simple because there are only two levels of hierarchy; simplicity enables us to close the model by permitting firms to choose how many seniors and juniors to employ, while individuals simultaneously choose how long to persist at the lower rank before quitting. The model generates testable predictions about careers and hierarchy.