Large Firms and Internal Labor Markets
AbstractThis paper introduces a model of internal labor markets that is consistent with the observed differences between workers in large and small firms with respect to wages and separation rates. In particular, firms constitute labor markets with no search frictions. Workers are free to move within a firm at no cost, whereas switching across firms is costly. If the quality of a match between a worker and a occupation/department/team within a firm is uncertain, then larger firms offer more opportunities for workers to find the right match. As a result, workers abandon unpromising matches more easily and are more likely to be employed in better matches. In equilibrium, workers in larger firms are more productive, earn higher wages and are less likely to quit, even conditional on their wage. Using data from the 1996 SIPP we find support for the predictions of our framework: internal mobility is higher in larger firms and depends negatively on wages and tenure; workers in larger firms switch occupations at higher wage levels and receive higher wages in their new occupation; the size-wage premium is higher for workers with longer tenure, while workers who leave large firms continue to enjoy high wages, but only if they remain in the same occupation; and finally the wage and size effects on the separation probability are significantly larger for workers who switch occupations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1216.
Date of creation: 2010
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maury Gittleman & Michael Horrigan & Mary Joyce, 1998. "Flexible workplace practices: Evidence from a nationally representative survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(1), pages 99-115, October.
- Jovanovic, Boyan, 1979.
"Job Matching and the Theory of Turnover,"
Journal of Political Economy,
University of Chicago Press, vol. 87(5), pages 972-90, October.
- Jaime Ortega, 2001. "Job Rotation as a Learning Mechanism," Management Science, INFORMS, vol. 47(10), pages 1361-1370, October.
- Kate Antonovics & Limor Golan, 2012.
"Experimentation and Job Choice,"
Journal of Labor Economics,
University of Chicago Press, vol. 30(2), pages 333 - 366.
- Giuseppe Moscarini, 2005. "Job Matching and the Wage Distribution," Econometrica, Econometric Society, vol. 73(2), pages 481-516, 03.
- Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
- Theodore Papageorgiou, 2009. "Learning Your Comparative Advantages," 2009 Meeting Papers 1150, Society for Economic Dynamics.
- Ueno, Yuko, 2014. "Size-specific Effects in Job Reallocation and Worker Mobility: Japan’s Experience from the 1990s," CIS Discussion paper series 624, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Fei Li & Can Tian, 2012.
"Directed Search and Job Rotation,"
PIER Working Paper Archive
12-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Matthias Kehrig & Nicolas Vincent, 2013. "Financial Frictions and Investment Dynamics in Multi-Plant Firms," Working Papers 13-56, Center for Economic Studies, U.S. Census Bureau.
- Li, Fei & Tian, Can, 2011. "Directed search and job rotation," MPRA Paper 33875, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.