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

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  • Luc Behagel

    (Crest)

  • Eve Caroli

    (Crest)

  • Emmanuelle Walkowiak

    (Crest)

Abstract

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.

Suggested Citation

  • Luc Behagel & Eve Caroli & Emmanuelle Walkowiak, 2007. "Innovation and Skill Upgrading : The Role of External vs Internal Labour Markets," Working Papers 2007-02, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2007-02
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    References listed on IDEAS

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    1. Sandra E. Black & Lisa M. Lynch, 2004. "What's driving the new economy?: the benefits of workplace innovation," Economic Journal, Royal Economic Society, vol. 114(493), pages 97-116, February.
    2. Philippe Askenazy & Eva Moreno Galbis, 2007. "The Impact of Technological and Organizational Changes on Labor Flows. Evidence on French Establishments," LABOUR, CEIS, vol. 21(2), pages 265-301, June.
    3. 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.
    4. Luc Behaghel & Nathalie Greenan, 2005. "Training and Age-Biased Technical Change : Evidence from French Micro Data," Working Papers 2005-06, Center for Research in Economics and Statistics.
    5. 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.
    6. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence from A Panel of British and French Establishments," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1449-1492.
    7. Bauer, Thomas K. & Bender, Stefan, 2004. "Technological change, organizational change, and job turnover," Labour Economics, Elsevier, vol. 11(3), pages 265-291, June.
    8. John M. Abowd & Patrick Corbel & Francis Kramarz, 1999. "The Entry And Exit Of Workers And The Growth Of Employment: An Analysis Of French Establishments," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 170-187, May.
    9. 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.
    10. 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.
    11. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
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    Citations

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    Cited by:

    1. Behaghel, Luc & Lorenceau, Adrien & Quantin, Simon, 2015. "Replacing churches and mason lodges? Tax exemptions and rural development," Journal of Public Economics, Elsevier, vol. 125(C), pages 1-15.
    2. Fibla Gasparín, Ma. Teresa, 2010. "Staffing strategies in SME's: determinants of external recruitment and internal promotion," Working Papers 2072/179603, Universitat Rovira i Virgili, Department of Economics.
    3. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," PSE Working Papers halshs-00646595, HAL.
    4. Antonioli, Davide & Manzalini, Rocco & Pini, Paolo, 2011. "Innovation, workers skills and industrial relations: Empirical evidence from firm-level Italian data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 312-326, May.
    5. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," Working Papers halshs-00646595, HAL.
    6. Philippe Askenazy & Julien Grenet, 2009. "Les managers français connaissent-ils leurs entreprises ? Les leçons de l’enquête REPONSE," Économie et Statistique, Programme National Persée, vol. 421(1), pages 53-82.
    7. Garcia-Canal, Esteban & Rialp-Criado, Alex & Rialp-Criado, Josep, 2013. "Speed of ICT integration strategies in absorptions: Insights from a qualitative study," European Management Journal, Elsevier, vol. 31(3), pages 295-307.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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