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Internal Labour Markets: Causes and Consequences

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  • Siebert, W S
  • Addison, J T

Abstract

The paper analyzes the causes and consequences of internal labor market rules that yield long tenure promotion from within, seniority, pensions, and "due process" in dismissals. About half the workforce are estimated to be in such markets. Competitive reasons for internal labor markets as a response to specific training and arms-length relationships between workers and firms are surveyed. These reasons are found to be consistent with the pattern of internal labor markets among non-union firms. However, some internal labor markets, (e.g. among small unionized firms) are probably a response to union pressure and government regulations. In these circumstances, low labor mobility could pose problems for policy. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Siebert, W S & Addison, J T, 1991. "Internal Labour Markets: Causes and Consequences," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 7(1), pages 76-92, Spring.
    • Handle: RePEc:oup:oxford:v:7:y:1991:i:1:p:76-92
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    Cited by:

    1. Heywood, John S. & Wei, Xiangdong, 1997. "Piece-Rate Payment Schemes and the Employment of Women: The Case of Hong Kong," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 237-255, October.
    2. Stephani, Jens, 2012. "Wage growth and career patterns of German low-wage workers," IAB-Discussion Paper 201201, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Jenny Meyer, 2011. "Workforce age and technology adoption in small and medium-sized service firms," Small Business Economics, Springer, vol. 37(3), pages 305-324, October.
    4. Peter Butler & Anita Hammer, 2020. "Pay progression in routinised service sector work: navigating the internal labour market in a fast food multinational company," Industrial Relations Journal, Wiley Blackwell, vol. 51(4), pages 351-371, July.
    5. Cornelissen, Thomas & Hübler, Olaf, 2007. "Unobserved Individual and Firm Heterogeneity in Wage and Tenure Functions: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 2741, Institute of Labor Economics (IZA).
    6. John Grahl & Paul League, 1992. "Integration Theory and European Labour Markets," British Journal of Industrial Relations, London School of Economics, vol. 30(4), pages 515-527, December.
    7. Gong, Xiaodong & van Soest, Arthur, 2002. "Wage differentials and mobility in the urban labour market: a panel data analysis for Mexico," Labour Economics, Elsevier, vol. 9(4), pages 513-529, September.
    8. Peter Howlett, 2004. "The internal labour dynamics of the Great Eastern Railway Company, 1870–1913," Economic History Review, Economic History Society, vol. 57(2), pages 396-422, May.
    9. Stephani, Jens, 2013. "Does it matter where you work? : employer characteristics and the wage growth of low-wage workers and higher-wage workers," IAB-Discussion Paper 201304, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Uwe Jirjahn, 2016. "Works Councils and Employer Attitudes toward the Incentive Effects of HRM Practices," Research Papers in Economics 2016-07, University of Trier, Department of Economics.
    11. John T. Addison & W. Stanley Siebert, 1992. "The Social Charter: Whatever Next?," British Journal of Industrial Relations, London School of Economics, vol. 30(4), pages 495-513, December.
    12. Baines, Dudley & Howlett, Peter & Johnson, Paul, 1992. "Human capital and payment systems in Britain, 1833-1914," Economic History Working Papers 22453, London School of Economics and Political Science, Department of Economic History.
    13. Clive Belfield & Xiangdong Wei, 2004. "Employer size-wage effects: evidence from matched employer-employee survey data in the UK," Applied Economics, Taylor & Francis Journals, vol. 36(3), pages 185-193.
    14. Robert MacKenzie & Christopher J McLachlan, 2023. "Restructuring, Redeployment and Job Churning within Internal Labour Markets," Work, Employment & Society, British Sociological Association, vol. 37(6), pages 1480-1496, December.
    15. Peter Anderson, 2021. "Unions and compensating wage differentials for workplace accident risk: the English and Welsh railway industry, 1902–12," Economic History Review, Economic History Society, vol. 74(4), pages 1006-1030, November.
    16. John S. Heywood & Uwe Jirjahn, 2015. "The German Labor Market for Older Workers in Comparative Perspective," Research Papers in Economics 2015-02, University of Trier, Department of Economics.
    17. Thomas Zwick, 2012. "Consequences of Seniority Wages on the Employment Structure," ILR Review, Cornell University, ILR School, vol. 65(1), pages 108-125, January.
    18. John S. Heywood & Uwe Jirjahn, 2016. "The hiring and employment of older workers in Germany: a comparative perspective [Die Beschäftigung und Neueinstellung älterer Arbeitnehmer in Deutschland: Eine vergleichende Perspektive]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(4), pages 349-366, December.
    19. Daniel, Kirsten & Heywood, John S., 2007. "The determinants of hiring older workers: UK evidence," Labour Economics, Elsevier, vol. 14(1), pages 35-51, January.
    20. Janet Walsh, 1997. "Employment Systems in Transition? A Comparative Analysis of Britain and Australia," Work, Employment & Society, British Sociological Association, vol. 11(1), pages 1-25, March.

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