Title: External Recruitment and Intra-firm Mobility
Reference Number: 1005
Publication Date: December 1999

William Chan
University of Hong Kong

In a recent paper (Chan 1996), I suggest that a contest between internal and external candidates for a position within a firm is generally biased in favor of the former in order to maintain work incentives. This implies that a successful external candidate tends to be superior in ability to his internally promoted colleagues and therefore enjoys a higher probability of subsequent promotion. Moreover, this effect tends to diminish as one goes up the hierarchy. Analyzing nine years of personnel data from a U.S. financial corporation, I find consistent support for this hypothesis.

Published in Economic Inquiry 44 (January 2006) pp. 169-184.

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Last modified: 05/28/2007