Internal Labor Markets: A Worker Flow Approach

Ingrid Huitfeld (), Andreas Ravndal Kostøl (), Jan Sebastian Nimczik () and Andrea Weber
Additional contact information
Ingrid Huitfeld: Statistics Norway
Andreas Ravndal Kostøl: Norwegian Business School (BI)
Jan Sebastian Nimczik: European School of Management and Technology (ESMT)

No 14637, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper develops a new method to study how workers’ career and wage profiles are shaped by internal labor markets (ILM) and job hierarchies in firms. Our paper tackles the conceptual challenge of organizing jobs within firms into hierarchy levels by proposing a data-driven ranking method based on observed worker flows between occupations within firms. We apply our method to linked employer-employee data from Norway that records fine-grained occupational codes and tracks contract changes within firms. Our findings confirm existing evidence that is primarily based on case studies for single firms. We expand on this by documenting substantial heterogeneity in the structure and hierarchy of ILMs across a broad range of large firms. Our findings on wage and promotion dynamics in ILMs are consistent with models of careers in organizations.

Keywords: organization of labor; internal labor markets; wage setting (search for similar items in EconPapers)
JEL-codes: J31 J62 M5 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-hrm, nep-isf and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Journal of Econometrics, 2023, 233 (2), 661-688

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Related works:
Journal Article: Internal labor markets: A worker flow approach (2023)
Working Paper: Internal Labor Markets: A Worker Flow Approach (2021)
Working Paper: Internal Labor Markets: A Worker Flow Approach (2021)
Working Paper: Internal labor markets. A worker flow approach (2021)
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