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Innovation and Skill Upgrading : The Role of External vs Internal Labour Markets

  • Luc Behagel


  • Eve Caroli


  • Emmanuelle Walkowiak


Following technical and organisational changes, firms may react to increasing skillrequirements either by training (on the internal labour market) or hiring the new skills, or acombination of the two.Using matched datasets with about 1,000 French plants, we assess the role of these externaland internal labour market strategies. We show that skill upgrading following technologicaland organisational changes takes place mostly through internal labour markets adjustments,except for the adoption of the Internet which gives rise to both internal and external types ofadjustments. We then consider the determinants of the strategies used by individual firms: dosome firms mainly rely on one strategy while other firms prevalently choose another strategy,and why? We show that firms' size and localisation are critical in explaining such differences.Skill upgrading strategies relying on the external labour market seem to be prevalentlyadopted by small urban plants.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2007-02.

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Length: 27
Date of creation: 2007
Date of revision:
Handle: RePEc:crs:wpaper:2007-02
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  1. Philippe Azkenazy & Eva Moreno, 2004. "The impact of technological and organizational changes on labor flows. Evidence on French establishments," DELTA Working Papers 2004-25, DELTA (Ecole normale supérieure).
  2. Caroli, Eve & Van Reenen, John, 1999. "Skill biased organizational change? Evidence from a panel of British and French establishments," CEPREMAP Working Papers (Couverture Orange) 9917, CEPREMAP.
  3. Sandra E Black & Lisa M Lynch, 2002. "What's Driving the New Economy? The Benefits of Workplace Innovation," Working Papers 02-03, Center for Economic Studies, U.S. Census Bureau.
  4. John M. Abowd & Patrick Corbel & Francis Kramarz, 1996. "The Entry and Exit of Workers and the Growth of Employment: An Analysis of French Establishments," NBER Working Papers 5551, National Bureau of Economic Research, Inc.
  5. Bauer, Thomas K. & Bender, Stefan, 2002. "Technological Change, Organizational Change, and Job Turnover," IZA Discussion Papers 570, Institute for the Study of Labor (IZA).
  6. Andrea Bassanini & Alison Booth & Giorgio Brunello & Maria De Paola & Edwin Leuven, 2006. "Workplace training in Europe," Post-Print halshs-00120601, HAL.
  7. Luc Behaghel & Nathalie Greenan, 2005. "Training and Age-Biased Technical Change : Evidence from French Micro Data," Working Papers 2005-06, Centre de Recherche en Economie et Statistique.
  8. Philippe Zamora, 2006. "Changements organisationnels, technologiques et recours à la formation dans les entreprises industrielles," Revue économique, Presses de Sciences-Po, vol. 57(6), pages 1235-1257.
  9. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 235-270, April.
  10. Luc Behaghel & Fabien Postel-Vinay, 2003. "Insécurité de l'emploi : le rôle protecteur de l'ancienneté a-t-il baissé en France ? Suivi d'un commentaire de Fabien Postel-Vinay," Économie et Statistique, Programme National Persée, vol. 366(1), pages 3-29.
  11. Emmanuelle Walkowiak, 2006. "Renouvellement de la main-d'œuvre et modernisation des entreprises," Revue économique, Presses de Sciences-Po, vol. 57(6), pages 1205-1233.
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