Insurance Between Firms: The Role of Internal Labor Markets

Giacinta Cestone, Chiara Fumagalli, Francis Kramarz () and Giovanni Pica

No 14162, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: We investigate how Internal Labor Markets (ILMs) allow organizations to accommodate shocks calling for costly labor adjustments. Using data on workers' mobility within French business groups, we find that adverse shocks affecting affiliated firms boost the proportion of workers redeployed to other group units rather than external firms. This effect is stronger when labor regulations are stricter and destination-firms are more efficient or enjoy better growth opportunities. Affiliated firms hit by positive shocks rely on the ILM for new hires, especially high-skilled workers. Overall, ILMs emerge as a co-insurance mechanism within organizations, providing job stability to employees as a by-product.

Keywords: Internal Labor Markets; Organizations; Business Groups (search for similar items in EconPapers)
JEL-codes: G30 J08 J40 L22 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2016
New Economics Papers: this item is included in nep-ias
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Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Insurance Between Firms: The Role of Internal Labor Markets (2020)
Working Paper: Insurance Between Firms: The Role of Internal Labor Markets (2020)
Working Paper: Insurance Between Firms: The Role of Internal Labor Markets (2017)
Working Paper: Insurance Between Firms: The Role of Internal Labor Markets (2016)
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