Hiring, Pay, Promotion and Job Security in an Internal Labor Market: Evidence from the Union Bank of Australia

Andrew Seltzer ()

No 98/5, Royal Holloway, University of London: Discussion Papers in Economics from Department of Economics, Royal Holloway University of London

Abstract: This paper uses the personnel and payroll records of the Union Bank of Australia to examine its personnel policies. It is shown that the bank maintained all of the classic internal labor market features described by Doeringer and Priore and others. There were restrictions on ports of entry; internal promotion was preferred to external hiring; there was a long-term relationship between the bank and its employees, frequently lasting the entire career; the bank maintained rigid, impersonal rules concerning pay raises; wages and employment were shielded from the external labor market; and tenure was more important than outside experience or current productivity in determining wages. Finally, it is shown that neither unions or public policy provided the impetus for the bank to adopt an internal labor market, rather it was designed to mitigate agency problems, reduce turnover, and screen employees.

Pages: 32 pages
Date: 1998-02, Revised 1998-02
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