Internal Labor Markets in Equilibrium

Timothy Bond

MPRA Paper from University Library of Munich, Germany

Abstract: Traditional models of promotion have difficulty explaining why many firms do not favor internal employees for advancement. I develop a new model to explain this phenomenon. My model generates an equilibrium where some, but not all, ex ante identical firms recruit strictly internally. These firms employ higher quality entry-level workers, since they hire supervisors exclusively from their lower ranks. The scarcity of high-quality workers limits the use of this strategy. I derive several testable predictions on wage-tenure profile differences across firms with varying recruitment practices and confirm these predictions using matched employer-employee data from the United Kingdom.

Keywords: promotion; internal labor markets; personnel (search for similar items in EconPapers)
JEL-codes: J30 M51 (search for similar items in EconPapers)
Date: 2011-11-10, Revised 2015-05-20
New Economics Papers: this item is included in nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Internal Labor Markets in Equilibrium (2017)
Working Paper: Internal Labor Markets in Equilibrium (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:67125

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