Internal and External Labor Markets: An Analysis of Matched Longitudinal Employer-Employee Data

23 Pages Posted: 15 Sep 2000 Last revised: 19 May 2023

See all articles by John M. Abowd

John M. Abowd

Cornell University Department of Economics; Labor Dynamics Institute; Cornell University - School of Industrial and Labor Relations; National Bureau of Economic Research (NBER); CREST; IZA Institute of Labor Economics

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Date Written: July 1997

Abstract

We decompose the real annual full time compensation costs of 1.1 million French workers followed over 12 years into a part that reflects their external opportunity wage and a part that reflects their internal wage rate. Using these components of compensation we investigate the extent to which firm-size wage differentials and inter-industry wage differentials are due to variability in the external wage (person effects) versus variability in the internal wage (firm effects). For France, we find that most of the firm-size wage effect and most of the inter-industry wage effect is due to person effects differences in the external wage rates.

Suggested Citation

Abowd, John and Kramarz, Francis, Internal and External Labor Markets: An Analysis of Matched Longitudinal Employer-Employee Data (July 1997). NBER Working Paper No. w6109, Available at SSRN: https://ssrn.com/abstract=225882

John Abowd (Contact Author)

Cornell University Department of Economics ( email )

Ithaca, NY 14853-3901
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HOME PAGE: http://https://blogs.cornell.edu/abowd/

Labor Dynamics Institute ( email )

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Cornell University - School of Industrial and Labor Relations ( email )

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National Bureau of Economic Research (NBER) ( email )

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CREST ( email )

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France

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IZA Institute of Labor Economics

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Bonn, D-53072
Germany

Francis Kramarz

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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