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

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  • L. BEHAGHEL
  • E. CAROLI
  • Emmanuelle WALKOWIAK

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.
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Suggested Citation

  • L. BEHAGHEL & E. CAROLI & Emmanuelle WALKOWIAK, 2007. "Innovation and Skill Upgrading: The Rôle of External vs Internal Labour Markets," LEO Working Papers / DR LEO 770, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    • Handle: RePEc:leo:wpaper:770
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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. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," Working Papers halshs-00646595, HAL.
    3. Michele Battisti & Christian Dustmann & Uta Schönberg, 2023. "Technological and Organizational Change and the Careers of Workers," Journal of the European Economic Association, European Economic Association, vol. 21(4), pages 1551-1594.
    4. Cyprien Batut & Eric Maurin, 2020. "Termination of Employment Contracts by Mutual Consent and Labor Market Fluidity," IAAEU Discussion Papers 202005, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    5. 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.
    6. Batut, Cyprien & Maurin, Eric, 2019. "From Ultima Ratio to Mutual Consent: The Effects of Changing Employment Protection Doctrine," IZA Discussion Papers 12440, Institute of Labor Economics (IZA).
    7. 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.
    8. 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.
    9. Nicoletti, Giuseppe & von Rueden, Christina & Andrews, Dan, 2020. "Digital technology diffusion: A matter of capabilities, incentives or both?," European Economic Review, Elsevier, vol. 128(C).

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    More about this item

    Keywords

    Innovation; Skill; Upgrading; Rôle of External; 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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