Template-type: ReDIF-Paper 1.0
Author-Name: Giacinta Cestone
Author-Name: Chiara Fumagalli
Author-Name: Francis Kramarz
Author-Name: Giovanni Pica 
Title: Insurance Between Firms: The Role of Internal Labor Markets
Abstract: We investigate how Internal Labor Markets (ILMs) allow organizations to accommodate shocks calling for costly labor adjustments. Using data on workers' mobility within French business groups, we find that adverse shocks affecting affiliated firms boost the proportion of workers redeployed to other group units rather than external firms. This effect is stronger when labor regulations are stricter and destination-firms are more efficient or enjoy better growth opportunities. Affiliated firms hit by positive shocks rely on the ILM for new hires, especially high-skilled workers. Overall, ILMs emerge as a co-insurance mechanism within organizations, providing job stability to employees as a by-product.
Classification-JEL: G30, L22, J08, J40  
Keywords: Internal Labor Markets, Organizations, Business Groups 
Length: 63 pages 
Number: 14162
Creation-Date: 2016
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp14162.pdf
File-Format: application/pdf
File-Size: 918
Handle: RePEc:baf:cbafwp:cbafwp14162