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Career and Wage Dynamics: Evidence from Linked Employer-Employee Data


  • Kauhanen, Antti
  • Napari, Sami


We study career and wage dynamics within and between firms using a large linked employer-employee panel dataset spanning 26 years. We construct six-level hierarchies for more than 5,000 firms. We replicate most of the analyses from Baker, Gibbs and Holmström (Quarterly Journal of Economics, 1994) and make some extensions. Many of our results corroborate their findings. Careers within firms are important, but the strong version of the theory of internal labor markets does not fit the data. Recent theories of career and wage dynamics explain our findings well.

Suggested Citation

  • Kauhanen, Antti & Napari, Sami, 2011. "Career and Wage Dynamics: Evidence from Linked Employer-Employee Data," Discussion Papers 1244, The Research Institute of the Finnish Economy.
  • Handle: RePEc:rif:dpaper:1244

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    References listed on IDEAS

    1. Bas Klaauw & António Dias da Silva, 2011. "Wage dynamics and promotions inside and between firms," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1513-1548, October.
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    Cited by:

    1. Petri Böckerman & Mika Maliranta, 2013. "Outsourcing, Occupational Restructuring, and Employee Well-Being: Is There a Silver Lining?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(4), pages 878-914, October.
    2. Jed DeVaro & Antti Kauhanen, 2016. "An “Opposing Responses” Test of Classic versus Market-Based Promotion Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 34(3), pages 747-779.
    3. Xin Jin, 2014. "The Signaling Role of Not Being Promoted: Theory and Evidence," Working Papers 0314, University of South Florida, Department of Economics.
    4. Dora Gicheva, 2013. "Working Long Hours and Early Career Outcomes in the High-End Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 785-824.
    5. Kato, Takao & Kauhanen, Antti & Salmi, Julia, 2013. "Empirical Evidence on the Dynamics of Incentive Plans," ETLA Working Papers 20, The Research Institute of the Finnish Economy.
    6. Valerie Smeets & Michael Waldman & Frederic Warzynski, 2013. "Performance, Career Dynamics, and Span of Control," Economics Working Papers 2013-02, Department of Economics and Business Economics, Aarhus University.
    7. Kauhanen, Antti & Salmi, Julia & Torkki, Paulus, 2013. "Performance Measurement in Healthcare Incentive Plans," ETLA Working Papers 18, The Research Institute of the Finnish Economy.
    8. Kato, Takao & Kauhanen, Antti, 2013. "Performance Pay and Enterprise Productivity: The Details Matter," ETLA Working Papers 21, The Research Institute of the Finnish Economy.
    9. Jed DeVaro, 2016. "Internal hiring or external recruitment?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 237-237, February.
    10. Jin, Xin, 2014. "The Signaling Role of Note Being Promoted: Theory and Evidence," MPRA Paper 58484, University Library of Munich, Germany.

    More about this item


    internal labor markets; employer changes; promotions; wage growth; human capital;

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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