External Recruitment and Intrafirm Mobility

William Chan

Economic Inquiry, 2006, vol. 44, issue 1, pages 169-184

Abstract: In Chan (1996), I suggest that a contest between internal and external candidates for a position within a firm is generally biased in favor of the former to maintain work incentive for existing workers. This implies that a successful external candidate tends to be superior in ability relative to internally promoted colleagues and therefore enjoys a higher probability of subsequent promotion. Moreover, this effect tends to diminish up the hierarchy if external competition is more of a threat at lower job levels. Analyzing personnel data from a U.S. financial corporation, I find consistent support for this hypothesis. (JEL J00, J41) Copyright 2006, Oxford University Press.

JEL-codes: J00 J41 (search for similar items in EconPapers)

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