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Institutional Labor Economics, the New Personnel Economics, and Internal Labor Markets: A Reconsideration

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  • Paul Osterman

Abstract

The author illustrates the utility of institutional labor economics and makes a case for a reconsideration of it. Two recent developments motivate this effort: the rise of New Personnel Economics (NPE) as a significant subfield of labor economics and the substantial shifts in work organization that have taken place since the 1990s. Understanding how and why firms have reorganized work opens the door for a renewed interest in institutional approaches. The author explains that the rules of institutional labor markets (ILMs) emerge from the competition between organizational interest groups—unions, personnel professionals, and the government—and competing views of firms' objectives, resulting in the rise of ILMs, the slow diffusion of High Performance Work Systems, strategies used to obtain a high level of commitment from workers, the use of contingent employees, and the spread of new promotion rules in response to equal employment opportunity pressures. As such, the role of power and influence in establishing work rules is of central concern, though more conventional NPE considerations also remain important.

Suggested Citation

  • Paul Osterman, 2011. "Institutional Labor Economics, the New Personnel Economics, and Internal Labor Markets: A Reconsideration," ILR Review, Cornell University, ILR School, vol. 64(4), pages 637-653, July.
    • Handle: RePEc:sae:ilrrev:v:64:y:2011:i:4:p:637-653
    DOI: 10.1177/001979391106400401
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    References listed on IDEAS

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    1. Marsden, David, 1999. "A Theory of Employment Systems: Micro-Foundations of Societal Diversity," OUP Catalogue, Oxford University Press, number 9780198294221, December.
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    11. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
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    Cited by:

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    2. Riley, Rebecca & Rosazza Bondibene, Chiara, 2017. "Raising the standard: Minimum wages and firm productivity," Labour Economics, Elsevier, vol. 44(C), pages 27-50.
    3. Müller, Steffen & Neubäumer, Renate, 2016. "Size of Training Firms and Cumulated Long-run Unemployment Exposure – The Role of Firms, Luck, and Ability in Young Workers’ Careers," IWH Discussion Papers 5/2016, Halle Institute for Economic Research (IWH).

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