Internal and External Labor Markets: A Personnel Economics Approach / Edward P. Lazear, Paul Oyer.

By:

Lazear, Edward P

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w10192.Publication details: Cambridge, Mass. National Bureau of Economic Research 2003.Description: 1 online resource: illustrations (black and white)Subject(s):

M5 - Personnel Economics

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Abstract: Internal labor markets are those where workers are hired into entry level jobs and higher levels are filled from within. Wages are determined internally and may be quite free of market pressure. External labor markets imply that workers move somewhat fluidly between firms and wages are determined by some aggregate process where firms do not have significant discretion over wage setting. There are a number of theories that lead to internal labor markets. Using data from Sweden from the late 1980s, it is found that although there is significant evidence of internal promotion being important, a significant external market exists that affects both wage setting and hiring patterns. Even in Sweden, which most would not choose as the best example of a free labor market, external factors seem to create strong discipline on the ability of firms to set wages.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w10192 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w1019 The Value of Waiting to Invest /	nber w10190 Why Firms Adopt Antitakeover Arrangements /	nber w10191 The Rise of the Skilled City /	nber w10192 Internal and External Labor Markets: A Personnel Economics Approach /	nber w10193 Varieties of Currency Crises /	nber w10194 Small Noise Asymptotics for a Stochastic Growth Model /	nber w10195 Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others /	Next

December 2003.

Internal labor markets are those where workers are hired into entry level jobs and higher levels are filled from within. Wages are determined internally and may be quite free of market pressure. External labor markets imply that workers move somewhat fluidly between firms and wages are determined by some aggregate process where firms do not have significant discretion over wage setting. There are a number of theories that lead to internal labor markets. Using data from Sweden from the late 1980s, it is found that although there is significant evidence of internal promotion being important, a significant external market exists that affects both wage setting and hiring patterns. Even in Sweden, which most would not choose as the best example of a free labor market, external factors seem to create strong discipline on the ability of firms to set wages.