Insurance Between Firms: The Role of Internal Labor Markets
Chiara Fumagalli,
Giacinta Cestone,
Francis Kramarz () and
Giovanni Pica
No 11336, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
We investigate how internal labor markets (ILMs) allow business groups to accommodate positive and negative shocks calling for labor adjustments. Group-affiliated units faced with positive shocks rely on the ILM for new hires, especially managers and other high-skilled workers, thus overcoming human capital bottlenecks that may curb growth. Adverse shocks affecting one unit in the organization increase workers' mobility to other units rather than external firms, with stricter employment protection causing an additional increase in internal mobility. ILMs emerge as a co-insurance mechanism, allowing organizations to bypass firing and hiring frictions and providing job stability to employees as a by-product.
Keywords: Internal labor markets; Business groups; Co-insurance (search for similar items in EconPapers)
JEL-codes: G30 J08 J40 L22 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-ias, nep-lma and nep-net
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Citations: View citations in EconPapers (20)
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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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