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External Recruitment and Intrafirm Mobility

Author

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  • William Chan

Abstract

In Chan (1996), I suggest that a contest between internal and external candidates for a position within a firm is generally biased in favor of the former to maintain work incentive for existing workers. This implies that a successful external candidate tends to be superior in ability relative to internally promoted colleagues and therefore enjoys a higher probability of subsequent promotion. Moreover, this effect tends to diminish up the hierarchy if external competition is more of a threat at lower job levels. Analyzing personnel data from a U.S. financial corporation, I find consistent support for this hypothesis. (JEL J00, J41) Copyright 2006, Oxford University Press.

Suggested Citation

  • William Chan, 2006. "External Recruitment and Intrafirm Mobility," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 169-184, January.
  • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:1:p:169-184
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    File URL: http://hdl.handle.net/10.1093/ei/cbj009
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    Citations

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    Cited by:

    1. Kambayashi, Ryo & Ueno, Yuko, 2016. "Firms' Incentive Provisions: Tournament Structure and Worker Flow," RCESR Discussion Paper Series DP16-2, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    2. Jed DeVaro, 2016. "Internal hiring or external recruitment?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 237-237, February.
    3. Kambayashi, Ryo & Ueno, Yuko, 2015. "Firms' Incentive Provisions: Tournament Structure and Worker Flow," RCESR Discussion Paper Series DP15-11, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    4. Waldman, Michael, 2013. "Classic promotion tournaments versus market-based tournaments," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 198-210.
    5. Wu, Mingqin & Chen, Bin, 2016. "Assignment of provincial officials based on economic performance: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 60-75.
    6. Christian Pfeifer, 2011. "Handicaps in Job Assignment: Insiders, Outsiders and Gender," Journal of Labor Research, Springer, vol. 32(1), pages 1-20, March.
    7. Bossler, Mario & Grunau, Philipp, 2016. "Asymmetric information in external versus internal promotions," IAB Discussion Paper 201611, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Michael Mueller, 2016. "Does Sporting Activity Foster Career Advancement?," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 2(4), pages 285-298.
    9. Kampkötter, Patrick & Sliwka, Dirk, 2014. "Wage premia for newly hired employees," Labour Economics, Elsevier, vol. 31(C), pages 45-60.
    10. Müller, Michael, 2016. "Fördert sportliche Aktivität den beruflichen Aufstieg?," Discussion Papers of the Institute for Organisational Economics 02/2016, University of Münster, Institute for Organisational Economics.
    11. Acosta, Pablo, 2010. "Promotion dynamics the Peter Principle: Incumbents vs. external hires," Labour Economics, Elsevier, vol. 17(6), pages 975-986, December.

    More about this item

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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