Internal Labor Markets and the Structure of Wages and Employment with Respect to Qualifications: A Survey of the Recent Literature
AbstractThe existence and development of internal labor markets has a strong impact on the structure of wages and employment. The paper discusses three important aspects of internal labor markets. Firstly, segregation due to qualification has been growing between establishments during the last years, accompanying the growing wage inequality between skills. Recent theoretical work trying to explain these combined facts refers to the properties of the production function. This leads to the following question: When do establishments choose a high wage strategy combined with a highly trained workforce and when do they opt for a low wage strategy employing a poorly trained workforce? Secondly, the measurement of qualification can be improved by using more establishment oriented variables that capture the interaction of qualification, information technologies and organization of work. The investment in information technologies has the strongest positive impact on productivity in firms with a high human capital endowment and a decentralized organization of work. Thirdly, some important restrictions for the adjustment of wage and employment structures are due to the existence of internal labor markets, and they are very similar across countries. Under specific conditions these restrictions can create incentives for firms to invest in the human capital of less qualified workers improving their wage and employment opportunities.
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Bibliographic InfoArticle provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 219 (1999)
Issue (Month): 1+2 (July)
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More information through EDIRC
Structure of wages; structure of employment; internal labor markets; skill biased technical change;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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