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

In: Research in Labor Economics

Author

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  • Antti Kauhanen
  • Sami Napari

Abstract

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 (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

  • Antti Kauhanen & Sami Napari, 2012. "Career and Wage Dynamics: Evidence from Linked Employer-Employee Data," Research in Labor Economics, in: Research in Labor Economics, pages 35-76, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-9121(2012)0000036006
    DOI: 10.1108/S0147-9121(2012)0000036006
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    References listed on IDEAS

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    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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    Citations

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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. Huitfeldt, Ingrid & Kostøl, Andreas R. & Nimczik, Jan & Weber, Andrea, 2023. "Internal labor markets: A worker flow approach," Journal of Econometrics, Elsevier, vol. 233(2), pages 661-688.
    3. Takii, Katsuya & Sasaki, Masaru & Wan, Junmin, 2020. "Synchronized job transfer and task-specific human capital," Journal of the Japanese and International Economies, Elsevier, vol. 56(C).
    4. Du, Shihan & Homrighausen, Pia & Wilke, Ralf A., 2018. "On omitted variables, proxies and unobserved effects in analysis of administrative labour market data," FDZ Methodenreport 201806_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Herbert Dawid & Mariya Mitkova & Anna Zaharieva, 2023. "Optimal promotions of competing firms in a frictional labour market with organizational hierarchies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 100-131, January.
    6. 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.
    7. Xin Jin, 2014. "The Signaling Role of Not Being Promoted: Theory and Evidence," Working Papers 0314, University of South Florida, Department of Economics.
    8. 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.
    9. 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.
    10. Valerie Smeets & Michael Waldman & Frederic Warzynski, 2019. "Performance, Career Dynamics, and Span of Control," Journal of Labor Economics, University of Chicago Press, vol. 37(4), pages 1183-1213.
    11. Jed DeVaro, 2020. "Internal hiring or external recruitment?," IZA World of Labor, Institute of Labor Economics (IZA), pages 237-237, May.
    12. Kauhanen, Antti & Salmi, Julia & Torkki, Paulus, 2013. "Performance Measurement in Healthcare Incentive Plans," ETLA Working Papers 18, The Research Institute of the Finnish Economy.
    13. Kato, Takao & Kauhanen, Antti, 2013. "Performance Pay and Enterprise Productivity: The Details Matter," ETLA Working Papers 21, The Research Institute of the Finnish Economy.
    14. Jed DeVaro & Antti Kauhanen & Nelli Valmari, 2019. "Internal and External Hiring," ILR Review, Cornell University, ILR School, vol. 72(4), pages 981-1008, August.
    15. Jed DeVaro & Oliver Gürtler, 2020. "Strategic shirking in competitive labor markets: A general model of multi‐task promotion tournaments with employer learning," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 335-376, April.
    16. repec:iab:iabfme:201806(en is not listed on IDEAS
    17. Cassidy, Hugh & DeVaro, Jed & Kauhanen, Antti, 2016. "Promotion signaling, gender, and turnover: New theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 140-166.
    18. Kenta Kojima & Katsuya Takii, 2023. "Job Value: New Measure of Career Success Potential from a Job," OSIPP Discussion Paper 23E001, Osaka School of International Public Policy, Osaka University.
    19. Jin, Xin, 2014. "The Signaling Role of Note Being Promoted: Theory and Evidence," MPRA Paper 58484, University Library of Munich, Germany.
    20. Kenta Kojima & Katsuya Takii, 2019. "Successful and Dead-end Jobs in a Bureaucracy:Evidence from Japan," OSIPP Discussion Paper 19E008, Osaka School of International Public Policy, Osaka University.

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    More about this item

    Keywords

    Internal labor markets; employer changes; promotions; wage growth; human capital;
    All these keywords.

    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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