Internal Promotion Versus External Recruitment: Evidence in Industrial Plants

An analysis is carried out in a sample of 738 industrial plants of the determining factors in the use of internal promotion of blue-collar workers to middle managers and skilled technicians asagainst their external recruitment. The use of internal promotion is positively correlated with variables indicative of the efforts made by plants to measure employees' skills, and to a lesser extent, with the level of specificity of investments in human capital made by blue-collar workers. Contrary to what was expected, variables related with the use and efficiency of other incentive systems have no significant influence on the increased or decreased use of internal promotion. These results are initial evidence that internal promotions are used to protect and favour specific investments, especially those made by firms in order to discover their workers'skills.