TY  - RPRT
        AU  - Beltrametti, Luca
AU  - Cardullo, Gabriele
        TI  - Hope, Noise, and the Efficiency of Perfect Meritocracy
        PY  - 2024/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17532
        UR  - https://www.iza.org/index.php/publications/dp17532
        AB  - This paper explores the economic effects of imperfect meritocracy in recruitment and career advancement. We compare two career promotion mechanisms: a fully meritocratic system and a "noisy" one, that allows less productive workers to advance. Our model shows that imperfect meritocracy in promotions can boost worker effort through the "hope effect," potentially leading to higher aggregate output and total welfare compared to a strictly meritocratic system. Less skilled workers benefit most under this scenario, while the high skilled are worse off. We conclude that when perfect meritocracy in recruitment is unattainable, it may not be optimal to enforce it in career advancement, offering insights for economic policy.
        KW  - meritocracy
KW  - efficiency
KW  - recruitment
KW  - career advancement
        ER  -