Internal Labor Market Dimensions and Labor Productivity*

Pedro Martins

A chapter in Workplace Productivity and Management Practices, 2021, vol. 49, pp 107-137 from Emerald Group Publishing Limited

Abstract: Personnel economics tends be based on single-firm case studies. Here, we examine several internal labor market dimensions of nearly 5,000 firms, over a period of 20 years, using detailed matched employer–employee data from Portugal. In the spirit ofBaker, Gibbs, and Holmstrom (1994a, 1994b), we consider worker turnover, the role of job levels and human capital as wage determinants, wage dispersion within job levels, the importance of tenure in promotions and exits, and the scope for careers. We find a large degree of diversity in most of these personnel dimensions across firms. Moreover, some dimensions are shown to be robust predictors of firm performance, even after controlling for time-invariant firm heterogeneity and other variables. These dimensions include low worker churning, the importance of careers, low wage dispersion at low and intermediate job levels, and a tight relationship between human capital variables and wages.

Keywords: Personnel; economics; job levels; wage dispersion; matched data; human resource management; careers; M51; M52; J31 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rleczz:s0147-912120210000049005

DOI: 10.1108/S0147-912120210000049005

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