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Firm-Wide Versus Establishment-Specific Labor-Market Practices

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  • David S. Kaplan

    () (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

  • Brooks Pierce

    () (U.S. Bureau of Labor Statistics)

Abstract

Economists have devoted substantial effort to understanding why some productive activities are organized under the same firm, with the majority of empirical studies focusing on product or capital markets. Using a unique data set that links occupational data from separate establishments to the establishments’ ultimate beneficial owners, we are the first to study labor markets across establishments and across industries within large and diverse firms. We use these data to determine how wages and employment in firms’ different establishments and different industries are related. We first identify patterns in the wage and occupational profiles of the industries that multi-industry firms choose to enter. We then show there to be a substantial component of wage rates common to all establishments and all industries within individual firms, even after netting out industry and occupation effects. This demonstrates the extent that internal labor markets of large, multi-establishment, multi-industry firms are linked throughout their entire organizations. Finally, we show that employment changes tend to be localized within establishments, suggesting that demand or productivity shocks to an establishment do not permeate throughout the firm.

Suggested Citation

  • David S. Kaplan & Brooks Pierce, 2001. "Firm-Wide Versus Establishment-Specific Labor-Market Practices," Working Papers 0105, Centro de Investigacion Economica, ITAM.
  • Handle: RePEc:cie:wpaper:0105
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    References listed on IDEAS

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    1. Anita M. McGahan & Michael E. Porter, 1999. "The Persistence of Shocks to Profitability," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 143-153, February.
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    11. Bronars, Stephen G & Famulari, Melissa, 1997. "Wage, Tenure, and Wage Growth Variation within and across Establishment," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 285-317, April.
    12. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
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    Cited by:

    1. Richard Duhautois & Fabrice Gilles & Héloïse Petit, 2012. "Worker flows and establishment wage differentials : a breakdown of the relationship," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00833872, HAL.
    2. repec:nos:vgmu00:2018:i:1:p:89-108 is not listed on IDEAS
    3. repec:scn:vgmu00:2018:i:1:p:89-108 is not listed on IDEAS

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