Munich Personal RePEc Archive

Internal Labor Markets in Equilibrium

Bond, Timothy N. (2011): Internal Labor Markets in Equilibrium.

This is the latest version of this item.


Download (327kB) | Preview


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.

Available Versions of this Item

  • Internal Labor Markets in Equilibrium. (deposited 08 Oct 2015 02:22) [Currently Displayed]
Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.