Internal and External Labor Markets: An Analysis of Matched Longitudinal Employer-Employee Data

23 Pages Posted: 15 Sep 2000 Last revised: 6 Oct 2010

See all articles by John M. Abowd

John M. Abowd

U.S. Census Bureau; Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; NBER (on leave); CREST; IZA Institute of Labor Economics

Francis Kramarz

Independent

Date Written: July 1997

Abstract

We decompose the real annual full time compensation costs of 1.1 million French workers followed over 12 years into a part that reflects their external opportunity wage and a part that reflects their internal wage rate. Using these components of compensation we investigate the extent to which firm-size wage differentials and inter-industry wage differentials are due to variability in the external wage (person effects) versus variability in the internal wage (firm effects). For France, we find that most of the firm-size wage effect and most of the inter-industry wage effect is due to person effects differences in the external wage rates.

Suggested Citation

Abowd, John Maron and Kramarz, Francis, Internal and External Labor Markets: An Analysis of Matched Longitudinal Employer-Employee Data (July 1997). NBER Working Paper No. w6109, Available at SSRN: https://ssrn.com/abstract=225882

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Francis Kramarz

Independent

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