If you know you are working hard to better yourself and you can see a light at the end of the tunnel no matter how far away then promotions are a great motivator.

Promotions are a great way to motivate employees, and if it's really earned. Just so long as someone else don't get stabbed in the back in the process. It's been referred to as brown nosing.

To see hard work rewarded and people advancing is usually good for morale.  If there's little room for growth, even lateral moves within the company some folks will look elsewhere.

It depends what a promotion entails. If a promotion means an increase in responsibility and pay, then that seems like a good means of motivation. If the promotion is merely a formality or change in title, then that does little good for most people.

A title is cheap, it only matters when there is an appropriate raise that follows. Promotions will definitely motivate you when they are done correctly.

Another one where it would be great if they were fair but many times they are not.

It's a good motivation if the employee earned and desired it.

This is a good way to motivate good employees. By moving them up the chain and allowing them to grown within the company they will reap the benefits of their performance. This however is also just a natural market response. The business demands good employees with knowledge of particular systems. If you are performing well and gaining knowledge you're simply forcing the business to purchase you at a new higher rate or you can take your capital else where. Promotions are not charity. They can motivate yes. But they're more of a market reponse than anything.

I like this idea of motivation. Of course, the employee would have had to earn this promotion, otherwise the employer will be seen as a biased shrew. His company may even come under scrutiny if he promotes dubiously, so be careful.