The New Employment Contract?

Ports and Ladders: The Nature and Relevance of Internal Labor Markets in a Changing World

“…Furthermore, Levine et al (2002) show that traditional pay differentials between large and small firms are eroding. They conclude that this cannot be entirely explained by changes in workforce characteristics and that the convergence shows a 'decline in the institutionalist pressures that formerly led to a size-wage effect' (Levine et al 2002: 73).…”

“…For example, in their analysis of pay in a large bank in the late 1980s, Baker, Gibbs, and Holmstrom (1994b) found clear evidence that the pay level of hiring cohorts relative to each other remained stable over time, a finding that implies that the internal structure shelters pay from the market. Similarly, Levine et al (2002) utilize a community salary survey conducted by the Federal Reserve Bank between 1956 and 1996 in Cleveland to analyze the persistence of internal structure differentials and find them to be relatively constant across the 1980s and 1990s, indicating no increased sensitivity of employer pay practices to market pressures.…”