Internal labor markets: A worker flow approach

Ingrid Huitfeldt, Andreas R. Kostøl, Jan Nimczik, Andrea Weber

    Research output: Contribution to journalArticlepeer-review

    Abstract (may include machine translation)

    This paper develops a new method to study how workers’ career and wage profiles are shaped by internal labor markets (ILM) and job hierarchies in firms. We tackle the conceptual challenge of organizing jobs within firms into hierarchy levels by proposing a data-driven ranking method based on observed worker flows between occupations within firms. We apply our method to linked employer–employee data from Norway that record fine-grained occupational codes and track contract changes within firms. Our findings confirm existing evidence that is primarily based on case studies for single firms. We expand on this by documenting substantial heterogeneity in the structure and hierarchy of ILMs across a broad range of large firms. Our findings on wage and promotion dynamics in ILMs are consistent with models of careers in organizations.

    Original languageEnglish
    Pages (from-to)661-688
    Number of pages28
    JournalJournal of Econometrics
    Volume233
    Issue number2
    DOIs
    StatePublished - Apr 2023

    Keywords

    • Internal labor markets
    • Organization of labor
    • Wage setting

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