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Internal labor markets. A worker flow approach

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Abstract

This paper develops a new method to study how workers’ career and wage profiles are shaped by internal labor markets (ILM) and job hierarchies in firms. Our paper tackles the conceptual challenge of organizing jobs within firms into hierarchy levels by proposing a data-driven ranking method based on ob-served worker flows between occupations within firms. We apply our method to linked employer-employee data from Norway that records fine-grained occupational codes and tracks contract changes within firms. Our findings confirm existing evidence that is primarily based on case studies for single firms. We expand on this by documenting substantial heterogeneity in the structure and hierarchy of ILMs across a broad range of large firms. Our findings on wage and promotion dynamics in ILMs are consistent with models of careers in organizations

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  • Ingrid Huitfeldt & Andreas R. Kostøl & Jan Nimczik & Andrea Weber, 2021. "Internal labor markets. A worker flow approach," Discussion Papers 961, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:961
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    Cited by:

    1. Ewens, Michael & Giroud, Xavier, 2025. "Corporate Hierarchy," SocArXiv yj4he_v1, Center for Open Science.
    2. Virginia Minni, 2023. "Making the invisible hand visible: Managers and the allocation of workers to jobs," STICERD - Economic Organisation and Public Policy Discussion Papers Series 72, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    3. Katrin Huber & Geske Rolvering, 2023. "Public child care and mothers’ career trajectories," CEPA Discussion Papers 64, Center for Economic Policy Analysis.
    4. Monica Costa Dias & Ella Johnson-Watts & Robert Joyce & Fabien Postel-Vinay & Peter Spittal & Xiaowei Xu, 2021. "Worker mobility and labour market opportunities," IFS Working Papers W21/29, Institute for Fiscal Studies.
    5. Coraggio, Luca & Pagano, Marco & Scognamiglio, Annalisa & Tåg, Joacim, 2025. "JAQ of all trades: Job mismatch, firm productivity and managerial quality," Journal of Financial Economics, Elsevier, vol. 164(C).
    6. Kline, Patrick, 2024. "Firm wage effects," Handbook of Labor Economics,, Elsevier.
    7. Sona Badalyan, 2025. "Crowded Career Ladders? Intra-Firm Spillovers of Raised Retirement Age," CERGE-EI Working Papers wp810, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    8. Cagatay Bircan & Guido Friebel & Tristan Stahl, 2025. "Gender Promotion Gaps in Knowledge Work: The Role of Task Assignment in Teams," RFBerlin Discussion Paper Series 2518, ROCKWOOL Foundation Berlin (RFBerlin).
    9. Corekcioglu, Gozde & Francesconi, Marco & Kunze, Astrid, 2024. "Expansions in paid parental leave and mothers’ economic progress," European Economic Review, Elsevier, vol. 169(C).
    10. Ingrid Haegele, 2022. "Talent Hoarding in Organizations," Papers 2206.15098, arXiv.org, revised Jul 2025.
    11. Katrin Huber & Geske Rolvering, 2023. "Public child care and mothers’ career trajectories," Working Papers 228, Bavarian Graduate Program in Economics (BGPE).

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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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