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The Internal Labor Markets of Business Groups

Author

Listed:
  • M Larrain
  • C Huneeus
  • F Huneeus
  • B Larrain
  • M Prem

Abstract

This paper provides novel micro evidence of labor mobility inside business groups. We show that worker flows between group firms are significantly more prevalent than between unaffiliated firms. We also find that groups respond to changing business conditions by reallocating top-occupation workers across affiliated firms. The wages of top workers increase as they move within the group. Internal labor reallocation is stronger when the worker’s origin firm controls the destination firm and in more complex hierarchical structures. Our results are consistent with the hypothesis that groups ease the transfer of intangible inputs, such as management practices, across firms.

Suggested Citation

  • M Larrain & C Huneeus & F Huneeus & B Larrain & M Prem, 2019. "The Internal Labor Markets of Business Groups," Documentos de Trabajo 17619, Universidad del Rosario.
    • Handle: RePEc:col:000092:017619
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    Citations

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    Cited by:

    1. He, Yuhan & Lyu, Jinqiu, 2025. "Export controls and innovation transfer within Chinese business groups: Evidence from the U.S. entity list," Research Policy, Elsevier, vol. 54(9).
    2. Giacinta Cestone & Chiara Fumagalli & Francis Kramarz & Giovanni Pica, 2024. "Exploiting Growth Opportunities: The Role of Internal Labour Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(5), pages 2676-2716.
    3. Lee, Kyounghun & Oh, Frederick Dongchuhl & Shin, Donglim & Yoon, Heejin, 2023. "Internal labor markets and corporate innovation: Evidence from Korean chaebols," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 146-162.
    4. F Aldunate & F GonzÔøΩlez & M Prem & F UrzÔøΩa, 2019. "The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids," Documentos de Trabajo 17348, Universidad del Rosario.
    5. repec:osf:socarx:z8f4h_v1 is not listed on IDEAS
    6. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).
    7. Pablo Doucet & Ignacio Requejo & Isabel Suárez-González, 2024. "Business groups’ internal labour markets and SME labour productivity," Small Business Economics, Springer, vol. 62(2), pages 707-725, February.

    More about this item

    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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