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Do internal labour markets survive in the New Economy? The Case of France

Author

Listed:
  • Luc Behaghel

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, LEA - Laboratoire d'Economie Appliquée - INRA - Institut National de la Recherche Agronomique)

  • Eve Caroli

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuelle Walkowiak

    (CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée)

Abstract

Following the adoption of information and communication technologies (ICT), firms may react to increasing skill requirements either by training or hiring the new skills, or a combination of the two. Using matched datasets with about 1,000 French plants, we assess the relative importance of these external and internal labour market strategies. We show that skill upgrading following technological and organisational changes takes place mostly through internal labour markets adjustments. Consistently with the results in the literature, we find that the intensive use of ICT is associated with an upward shift in the occupational structure within firms. We show that about one third of the upgrading of the occupational structure is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce. When looking at potential heterogeneity across firms in skill upgrading strategies, we find that all firms rely much more on promotions than on external movements in order to shift their occupational structure upward. In contrast, different training patterns are found across sectors: the use of ICT is strongly correlated with training for all occupational groups in manufacturing sectors, whereas this is not the case in services. This difference is robust to controlling for other sources of heterogeneity and may be explained by the fact that labour turnover is much higher in services than in manufacturing.

Suggested Citation

  • Luc Behaghel & Eve Caroli & Emmanuelle Walkowiak, 2009. "Do internal labour markets survive in the New Economy? The Case of France," Working Papers halshs-00567682, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00567682
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    References listed on IDEAS

    as
    1. Givord, Pauline & Maurin, Eric, 2004. "Changes in job security and their causes: An empirical analysis for France, 1982-2002," European Economic Review, Elsevier, vol. 48(3), pages 595-615, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    technical change; labour turnover; skill bias; training; internal labour markets;
    All these keywords.

    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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