Internal Labor Markets: A Case Study

FEUNL Working Paper Series No. 378

41 Pages Posted: 12 Dec 2005

See all articles by Francisco Lima

Francisco Lima

Instituto Superior Técnico (IST) - Department of Engineering and Management; Center for Management Studies (CEG-IST); Statistics Portugal

Date Written: January 2000

Abstract

We select one firm from a large data set of firms and study its internal economics. First we prove that the information available allows us to inspect the personnel policies of the firm. Furthermore, this fact allows moving from the case study to more comprehensive studies in personnel economics using institutional surveys. The analysis also shows the patterns of workers' promotions and the differences in the characteristics of insider versus outsider workers. The decision to promote is analyzed. The hierarchic design directly influences the wage policy. Wages are determined to a great extent by the layers of the hierarchy. There are wage premiums upon promotion, even if the worker does not change his place in the organization. When the promoted worker moves up in the hierarchy he comes from the top of the wage distribution at the old job and goes to the bottom of it in the new job. We present evidence on workers' exit and entry to the bottom of the wage distribution, especially in the lower part of the hierarchy.

Keywords: Internal labor market, personnel economics, hierarchy

JEL Classification: J31, J33, J41

Suggested Citation

Lima, Francisco, Internal Labor Markets: A Case Study (January 2000). FEUNL Working Paper Series No. 378, Available at SSRN: https://ssrn.com/abstract=869067 or http://dx.doi.org/10.2139/ssrn.869067

Francisco Lima (Contact Author)

Instituto Superior Técnico (IST) - Department of Engineering and Management ( email )

Av. Rovisco Pais
Lisbon, Lisbon 1049-001
Portugal

HOME PAGE: http://https://fenix.ist.utl.pt/homepage/ist14367

Center for Management Studies (CEG-IST) ( email )

Lisbon
Portugal

Statistics Portugal ( email )

Portugal