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Monkey Bars and Ladders: The Importance of Lateral and Vertical Job Mobility in Internal Labor Market Careers

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Author Info
Dohmen, Thomas J. (IZA Bonn)
Kriechel, Ben (ROA, Maastricht University and IZA Bonn)
Pfann, Gerard A. (BIRC, Maastricht University, CEPR and IZA Bonn)

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Abstract

The research area of the new economics of personnel has a short but important and insightful history. Theory ahead of measurement asks for testing newly developed human resource concepts. These tests often need detailed firm-specific data. Repetition and comparison of results is key in finding out what holds true in general and what marks idiosyncrasy. In this paper, we compare results from the existing literature with the outcomes from analyzing personnel data of the Dutch aircraft manufacturer Fokker during the period January 1, 1987, the day the company started with their electronic personnel filing system, until March 15, 1996, the day the company filed for bankruptcy. We shed light on differences in the functioning of internal labor markets during periods of workforce growth and decline. We find multiple ports of entry that are concentrated in low blue and white-collar levels. New entrants are younger and have higher educational levels than incumbent workers who are promoted to similar jobs. Despite substantial variation in individual wages, careers are important as wages are strongly related to job levels. Promotion rates fall and demotion rates rise when the firm enters the stage of demise. Job-rotation improves promotion chances, stimulates wage growth, and reduces the lay-off risk.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 867.

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Length: 76 pages
Date of creation: Aug 2003
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Handle: RePEc:iza:izadps:dp867

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Related research
Keywords: internal labor markets; human resource management; personnel economics;

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Find related papers by JEL classification:
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
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs

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  1. Christian Belzil & Michael Bognanno, 2005. "Promotions, Demotions, Halo Effects and Earnings Dynamics of American Executives," IZA Discussion Papers 1630, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Ben Kriechel & Gerard Pfann, 2005. "The role of specific and general human capital after displacement," Education Economics, Taylor and Francis Journals, vol. 13(2), pages 223-236, June. [Downloadable!] (restricted)
  3. Christian Grund & Niels Westergaard-Nielsen, 2005. "The Dispersion of Employees' Wage Increases and Firm Performance," Bonn Econ Discussion Papers bgse3_2005, University of Bonn, Germany. [Downloadable!]
    Other versions:
  4. Ben Kriechel & Gerard Pfann, 2006. "Learning to update your reservation wage while looking for a new job," Portuguese Economic Journal, Springer, vol. 5(2), pages 135-148, August. [Downloadable!] (restricted)
  5. Dohmen, Thomas J., 2003. "Performance, Seniority and Wages: Formal Salary Systems and Individual Earnings Profiles," IZA Discussion Papers 935, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Matthias Kräkel, 2008. "Relative Performance Pay, Bonuses, and Job-Promotion Tournaments," Bonn Econ Discussion Papers bgse16_2008, University of Bonn, Germany. [Downloadable!]
    Other versions:
  7. Christian Belzil & Michael Bognanno, 2008. "Promotions, Demotions, Halo Effects and the Earnings Dynamics of American executives," Post-Print halshs-00354270_v1, HAL. [Downloadable!]
  8. Guido Friebel & Elena Panova, 2007. "Insider Privatization and Careers - A Study of a Russian Firm in Transition," NBER Working Papers 12998, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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