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- Title
PROFIT SHARING IN INTERNAL LABOUR MARKETS.
- Authors
Brunello, Giorgio
- Abstract
I have presented a simple model where insiders and the firm bargain over profit sharing and have shown that developed internal labour markets that emphasise internal promotion imply that profit sharing can be acceptable to insiders. The key point is that a full appreciation of the insider-outsider distinction requires that we evaluate one of its most evident consequences, the development of highly structured internal labour markets with promotion systems that favour insiders. The positive relationship between internal promotion and profit sharing is particularly appealing because it conforms with existing evidence. Profit sharing is alleged to be a specific feature of the japanese economy, where internal promotion has been found to be more important than elsewhere by a number of studies. Dore (1986), for instance, emphasises the importance of long term attachment and internal promotion in the 'cooperative model' of the firm that is typical of Japan. Koike (1988) also argues that ' ... the major difference between US and Japanese firms is the extent of workers' careers' (p. 304), meaning by that both the length and the breadth of promotion ladders. An important part of jobs near the top and at the top of the hierarchy are notoriously filled in Japan by insiders who have climbed all the way from the bottom of the ladder (see Imai and Komiya (1989) and Itami (1989)). According to a survey of 3,ooo large japanese firms by Recruit Corporation, about 70% of workers with more than 40 years of age have been promoted to lower supervisory positions because of their length of service (Recruit, 1988). Promotion to higher supervisory positions is based on performance tournaments between these workers.
- Subjects
PROFIT-sharing; LABOR market
- Publication
Economic Journal, 1992, Vol 102, Issue 412, p570
- ISSN
0013-0133
- Publication type
Article
- DOI
10.2307/2234293