Working Paper: CEPR ID: DP7843
Authors: Catherine Haeck; Frank Verboven
Abstract: Based on a rich personnel data set of a large university we find strong evidence for the existence of an internal labor market. First, the lowest academic rank is a strong port of entry and the highest rank is a port of exit. Second, wages do not follow external wage developments, since they follow administrative rules that have not been modified for a long time. We subsequently look at internal promotion dynamics to assess the relevance of alternative internal labor market theories. A unique feature of our data is that we have good measures of performance. Consistent with incentive theories of internal labor markets, research and teaching performance turn out to be crucial determinants of promotion dynamics. Learning theories of internal labor markets appear to have support when we do not account for observed performance, but the evidence becomes much weaker once we control for performance. Finally, we find that administrative rigidities play an important role in explaining promotion dynamics.
Keywords: career dynamics; incentives; learning; personnel economics
JEL Codes: J30; J31; J45
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| internal labor market existence (J29) | promotion dynamics (M51) |
| administrative rules (K23) | wage determination (J31) |
| observable performance metrics (L25) | promotion dynamics (M51) |
| prior performance (L25) | promotion dynamics (M51) |
| speed of previous promotions (M51) | likelihood of future promotions (M51) |
| performance metrics (C52) | learning theories of promotion (C92) |