Reconsidering Occupational Internal Labor Markets: Incidence and Consequences

Abstract

What are useful ways to characterize varying employment systems? This article returns to an older idea, Internal Labor Markets (ILMs). The traditional assumption characterized ILMs as the core of the labor market but current thinking argues that ILMs have frayed. Little direct measurement has been carried out, however, and both viewpoints have relied on proxies or case studies. The author utilizes a new survey of employed US workers to provide an estimate of the incidence of ILMs and finds that between 25 and 40% percent of adult workers are in ILMs. The article then elaborates theory regarding the practices of ILMs, a theory grounded in the idea of complementary bundles of human resource practices, and asks what are the correlates of being in an ILM. Findings show that although wages in ILMs are no higher than non-ILM wages, ILMs are positively associated with other aspects of job quality and attitudes across the board.