Opening the Black Box: Economic Analyses of Internal Labour Markets

Abstract

Kingdom. The authors would like to thank the anonymous referees of the JIR for comments on an earlier draft of this paper.Recent years have seen the increasing interest of economists in the behaviour of firms in relation to their employees. The result is a reduction in the dichotomy of subject matter between industrial relations and labour economics. Despite this, substantial differences still exist, particularly between the approach of neoclassical economists and those (both economists and others) working outside this tradition. These differences are both theoretical and methodological and suggest a need for researchers examining the internal labour market to build bridges in their efforts to understand how firms price and allocate their labour. It is also suggested that a greater emphasis on the testing of competing hypotheses would be useful in this respect.

The management of managers: A review and conceptual framework

“…Internal labour markets within a single, large firm are, of course, segmented (Creedy and Whitfield 1992). They are not simply concerned with the management of managers.…”

The management of managers: challenges in a small economy

“…ILMs also provide opportunities for firms to learn more about the abilities of managers and therefore deal more effectively with potential agency concerns (Ortin‐Angel and Salas‐Fumas, 1998). ILMs are, of course, segmented within individual firms (Creedy and Whitfield, 1992) and it is within what Pinfield and Berner (1994) refer to as the “upper‐tier” segment, and what Osterman (1987) calls the “salaried” segment, that managers are to be found. The strong likelihood is that the “upper‐tier” or salaried” segment of an ILM offers more extensive career structures and better promotional opportunities than is true in other segments of ILMs.…”