Internal Labor Markets: A Worker Flow Approach

Arbeitspapier

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. Our paper tackles 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 records fine-grained occupational codes and tracks 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14637

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Job, Occupational, and Intergenerational Mobility; Promotion
• Subject: internal labor markets ; organization of labor ; wage setting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Huitfeldt, Ingrid ; Kostøl, Andreas Ravndal ; Nimczik, Jan Sebastian ; Weber, Andrea
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/245688
• Last update: 10.03.2025, 11:43 AM CET