Human capital and hierarchy

This paper investigates the relationship between schooling, experience, hierarchy and earnings, using sample data drawn from one of the largest companies in the Indian private sector. A recursive path approach is posited and an analysis of the results indicates that hierarchic status acts as an intervening variable to channel the transmission effect of schooling and experience onto earnings. After controlling for differences in schooling, hierarchic status is shown to rise monotonically, albeit by diminishing increments, with experience, thereby offering support for the marginal productivity theory. In the process, the weak version of the screening hypothesis is also borne out.