Document Type

Article

Publication Date

Winter 1997

Abstract

This article analyzes employee participatory programs from the internal labor markets perspective. Internal Labor Markets (“ILM”) refer to the explicit or implicit agreements between employer and employees incorporating rules governing wages, working hours, promotion opportunities and grievance procedures. In order to function properly, ILMs require employees to learn skills that are valuable to the contracting firm, but are of much lesser value elsewhere. Employees agree to acquire such “firm-specific” skills and employers agree to subsidize the training needed to obtain these new skills. It is a mutually beneficial arrangement: employers expect to observe increases in productivity and efficiency and employees expect increases in pay and employment security as their tenure with the firm increases. These implicit or explicit agreements, however, may not be realized. A countervailing characteristic of ILMs is that once established, both parties might have strong incentives to refuse to perform, that is, to engage in opportunistic behavior. Examining ways to prevent such behavior is the central theme of this Article.

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.