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The Internal Labor Markets of Business Groups

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  • Larrain, M
  • Huneeus, C
  • Huneeus, F
  • Larrain, B
  • Prem, M

Abstract

This paper provides novel micro evidence of labor mobility inside business groups. We show that worker flows between group firms are significantly more prevalent than between unaffiliated firms. We also find that groups respond to changing business conditions by reallocating top-occupation workers across affiliated firms. The wages of top workers increase as they move within the group. Internal labor reallocation is stronger when the worker’s origin firm controls the destination firm and in more complex hierarchical structures. Our results are consistent with the hypothesis that groups ease the transfer of intangible inputs, such as management practices, across firms.

Suggested Citation

  • Larrain, M & Huneeus, C & Huneeus, F & Larrain, B & Prem, M, 2019. "The Internal Labor Markets of Business Groups," Documentos de Trabajo 17619, Universidad del Rosario.
    • Handle: RePEc:col:000092:017619
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    Cited by:

    1. Aldunate, Felipe & González, Felipe & Prem, Mounu & Urzúa, Francisco, 2020. "Privatization and business groups: Evidence from the Chicago Boys in Chile," Explorations in Economic History, Elsevier, vol. 78(C).
    2. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).
    3. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2021. "Make the Economy Scream? U.S. Banks and Foreign Firms During the Cold War," SocArXiv bhwk7, Center for Open Science.
    4. Giacinta Cestone & Chiara Fumagalli & Francis Kramarz & Giovanni Pica, 2023. "Exploiting Growth Opportunities: The Role of Internal Labor Markets," CSEF Working Papers 663, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Lee, Kyounghun & Oh, Frederick Dongchuhl & Shin, Donglim & Yoon, Heejin, 2023. "Internal labor markets and corporate innovation: Evidence from Korean chaebols," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 146-162.

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    More about this item

    Keywords

    Internal labor markets; business groups; ownership; intangible inputs;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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