The Internal Economics of the Firm: Evidence from Personnel Data

  title={The Internal Economics of the Firm: Evidence from Personnel Data},
  author={George P. Baker and Michael J. Gibbs and Bengt Holmstrom},
  journal={Quarterly Journal of Economics},
We analyze twenty years of personnel data from one firm. The hierarchical structure is quite simple and stable. Career movements suggest that the employee's rate of learning and the firm's learning about ability are important. There are promotion "fast tracks." Exit rates vary little with tenure or salary. The firm has personnel policies like those described in the internal labor markets literature, although several theoretical preconditions for ILMs, such as ports of entry and exit, are… 

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