Do internal labour markets survive in the New Economy? The Case of France

Following the adoption of information and communication technologies (ICT), firms may react to increasing skill requirements either by training or hiring the new skills, or a combination of the two. Using matched datasets with about 1,000 French plants, we assess the relative importance of these external and internal labour market strategies. We show that skill upgrading following technological and organisational changes takes place mostly through internal labour markets adjustments. Consistently with the results in the literature, we find that the intensive use of ICT is associated with an upward shift in the occupational structure within firms. We show that about one third of the upgrading of the occupational structure is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce. When looking at potential heterogeneity across firms in skill upgrading strategies, we find that all firms rely much more on promotions than on external movements in order to shift their occupational structure upward. In contrast, different training patterns are found across sectors: the use of ICT is strongly correlated with training for all occupational groups in manufacturing sectors, whereas this is not the case in services. This difference is robust to controlling for other sources of heterogeneity and may be explained by the fact that labour turnover is much higher in services than in manufacturing.technical change ; labour turnover ; skill bias ; training ; internal labour markets

Information and Communication Technologies and Skill Upgrading: the Role of Internal vs External Labour Markets

Following the adoption of information and communication technologies (ICT), firms are likely to face increasing skill requirements. They may react either by training or hiring the new skills, or by a combination of both. We first show that ICT are indeed skill biased and we then assess the relative importance of external and internal labour market strategies. We show that skill upgrading following ICT adoption takes place mostly through internal labour markets adjustments. The introduction of ICT is associated with an upward shift in firms' occupational structure, of which one third is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce, even if this varies across industries.Technical change, labour turnover, skill bias, training, internal labour markets

Information and Communication Technologies and Skill Upgrading: The Role of Internal vs. External Labour Markets

Following the adoption of information and communication technologies (ICT), firms are likely to face increasing skill requirements. They may react either by training or hiring the new skills, or by a combination of both. We first show that ICT are indeed skill biased and we then assess the relative importance of external and internal labour market strategies. We show that skill upgrading following ICT adoption takes place mostly through internal labour markets adjustments. The introduction of ICT is associated with an upward shift in firms’ occupational structure, of which one third is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce, even if this varies across industries.skill bias, technical change, internal labour markets, labour turnover, training

The Substitution of Worksharing and Short-Time Compensation in France: A Difference-in-differences Approach

The short-time compensation (STC) program aims at avoiding redundancies in case of strong short-term downturns. In the literature, STC is an instrument of both job security and flexibility. This paper investigates the impact of worksharing on STC in France. The form of worksharing examined in this study is the reduction of the standard or contractual hours worked per week to 35 hours in France. We quantify the average decrease in the STC recourse with difference-in-differences estimators assessed on a balanced panel of French establishments. We highlight a substitution effect between STC and worksharing due to their internal flexibility role. As a consequence, STC seems to be less used as a flexibility device and the worksharing policy would refocus STC on its employment protection role.

Short-Time Compensation and Establishment Exit: An Empirical Analysis with French Data

According to the French law, the short-time compensation (STC) program aims at avoiding redundancies during short-term downturns. Even if it does not shield establishments from redundancies (Calavrezo, Duhautois and Walkowiak, 2009a), STC can preserve an establishment's survival. This paper studies the relationship between STC and establishment exit over the period 2000-2005. We merge six data sets and we test the relationship between STC and establishment exit with propensity score matching techniques. Our results show that, on average, the year after establishments implement STC, they exit the market more intensely than establishments that do not use the program.short-time compensation, establishment exit, selection bias, propensity score matching

Information Technology, Work Organisation and Social Interactions

The complementarity between the use of information technology and innovative organisational practices, on the one hand, and the selection principles that guide their diffusion at the work post level, on the other hand, must be analysed in a unified framework. The common selection principles governing the allocation of information technology and the organisational design of the work posts are connected to the choice of the network configuration of social interactions within the company. This interactive social structure is analysed with reference to the concept of social capital (human capital which an individual can access when interacting with others). Therefore, in the complementarity between technology and organisation we can distinguish between that which derives from a pure coordination of choices in these two dimensions from that which derives from the selection process of workers. The tests are conducted within the labour force section of the 1997 survey Organisational Change and Computerisation.Computerization, Work Organization, Complementarity, Social Capital

Informatique, organisation du travail et intéractions sociales

Nous proposons un cadre d’analyse unifié des liens de complémentarité entre usage de l’informatique et pratiques organisationnelles innovantes ainsi que des principes de sélection qui sous-tendent leur diffusion au niveau des postes de travail. Nous montrons que les principes communs de sélection, dans l’attribution de l’informatique et le design organisationnel du poste de travail, renvoient au choix de configuration du réseau d’interactions sociales au sein de la firme. Cette structure sociale d’interaction est analysée en référence au concept de « capital social ». Nous distinguons alors, dans la complémentarité entre technologie et organisation, ce qui relève d’une pure coordination des choix dans ces deux dimensions de ce qui relève de la sélection des salariés. Les tests économétriques, que nous avons menés en nous appuyant sur le volet « salariés » de l'enquête « Changements organisationnels et informatisation » (COI) réalisée en 1997, permettent de vérifier quatre propositions. Tout d’abord, nous montrons que le capital social des salariés favorise leur accès aux ordinateurs et plus généralement aux technologies de l’information et de la communication (TIC). Cette sélection dans l’attribution de l’équipement semble spécifique des TIC, puisqu’elle ne permet pas de caractériser l’attribution d’une machine automatique. Deuxièmement, cette même logique de sélection anime l’accès à un poste ayant des caractéristiques productives et informationnelles innovantes. Troisièmement, l’informatique est corrélée aux caractéristiques organisationnelles innovantes des postes de travail résultant de la diffusion des nouvelles formes d’organisation, mais ce lien n’est pas uniforme au sein des différents groupes de professions. Enfin, les caractéristiques organisationnelles innovantes qui intègrent une dimension relationnelle entretiennent avec l’informatique une relation de complémentarité qui puise essentiellement sa source dans la manière dont les salariés ont été sélectionnés pour occuper un poste de travail modernisé.Informatisation, organisation du travail, complémentarité, capital social

Do internal labour markets survive in the New Economy? The Case of France

Following the adoption of information and communication technologies (ICT), firms may react to increasing skill requirements either by training or hiring the new skills, or a combination of the two. Using matched datasets with about 1,000 French plants, we assess the relative importance of these external and internal labour market strategies. We show that skill upgrading following technological and organisational changes takes place mostly through internal labour markets adjustments. Consistently with the results in the literature, we find that the intensive use of ICT is associated with an upward shift in the occupational structure within firms. We show that about one third of the upgrading of the occupational structure is due to hiring and firing workers from and to the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce. When looking at potential heterogeneity across firms in skill upgrading strategies, we find that all firms rely much more on promotions than on external movements in order to shift their occupational structure upward. In contrast, different training patterns are found across sectors: the use of ICT is strongly correlated with training for all occupational groups in manufacturing sectors, whereas this is not the case in services. This difference is robust to controlling for other sources of heterogeneity and may be explained by the fact that labour turnover is much higher in services than in manufacturing.Lorsque les entreprises adoptent des nouvelles technologies d'information et de communication (TIC), elles font face à de nouveaux besoins en matière de compétences. Elles peuvent y répondre de trois façons : soit en formant leurs propres salariés, soit en embauchant de nouveaux salariés plus qualifiés, soit en combinant ces deux stratégies. Dans cet article nous évaluons l'importance relative des stratégies de marché interne et externe du travail en utilisant une base de données portant sur un échantillon de 1000 établissements français. Nous montrons que l'accroissement du niveau de qualification de la main-d'œuvre suite à l'adoption des TIC se fait, pour l'essentiel, par recours au marché interne du travail. Tout comme dans la littérature existant sur la question, nous trouvons que l'usage intensif de TIC est associé à une déformation vers le haut de la structure des qualifications dans les entreprises. Nous montrons qu'environ un tiers de cette déformation est due à l'embauche et au licenciement de salariés sur le marché externe du travail, alors que les deux tiers sont dus à des promotions. De plus, nous ne trouvons pas d'évidence de turnover en excès. En revanche, les entreprises françaises ont largement recours à la formation continue afin d'accroître le niveau de qualification de leur main-d'œuvre. Lorsque l'on en compte l'hétérogénéité potentielle existant entre les entreprises il apparaît que toutes les entreprises ont beaucoup plus recours aux promotions qu'aux mouvements externes afin d'accroître le niveau de qualification de leur main-d'œuvre. En revanche les stratégies de formation continue varient d'un secteur à l'autre. L'utilisation intensive des TIC est ainsi fortement corrélée avec le recours à la formation continue pour toutes les CSP dans le secteur manufacturier, alors que ce n'est pas le cas dans les services. Cette différence est robuste à l'introduction de contrôles pour d'autres source d'hétérogénéité et peut s'expliquer par le fait que le niveau du turnover est beaucoup plus élevé dans les services que dans l'industrie

Innovation and skill upgrading: The role of external vs internal labour markets

Following technical and organisational changes, firms may react to increasing skill requirements either by training or hiring the new skills, or a combination of the two. Using matched datasets with about 1,000 French plants, we assess the relative importance of these external and internal labour market strategies. We show that skill upgrading following technological and organisational changes takes place mostly through internal labour markets adjustments. Consistently with the results in the literature, we find that new technologies and organisational changes are associated with an upward shift in the occupational structure within firms. We show that about one third of the upgrading of the occupational structure is due to hiring and firing workers on the external labour market, whereas two-thirds are due to promotions. Moreover, we find no compelling evidence of external labour market strategies based on "excess turnover". In contrast, French firms heavily rely on training in order to upgrade the skill level of their workforce. When splitting the sample across sectors, this pattern of results appears to be particularly strong for manufacturing firms whereas, in services, external labour market strategies tend to be more widespread. We then consider the determinants of the strategies chosen by firms. We argue that the relative cost of internal versus external labour market flexibility is likely to be critical and that it can be partly captured by firm size and by the density on the local labour market. We find that external labor market strategies tend to be more important when firms are located on high-density labor markets.Lors de l'introduction de changements technologiques et organisationnels, les entreprises font face à des besoins croissants en matière de compétences. Elles peuvent y réagir de plusieurs façons : soit par la formation continue (recours au marché interne du travail) soit par le recrutement externe des nouvelles compétences nécessaires, soit encore par une combinaison des deux stratégies. Nous évaluons les rôles respectifs de ces stratégies interne et externe sur des données appariées portant sur 1000 établissements français. Nous montrons que, suite aux changements technologiques et organisationnels, l'acquisition de nouvelles compétences passe essentiellement par des ajustements relevant du marché interne. Comme il est désormais classique dans la littérature, nous trouvons que les changements techniques et organisationnels sont associés à une déformation vers le haut de la structure des qualifications dans les entreprises. Mon montrons qu'environ un tiers de cette déformation est due à des entrées et sorties en provenance du marché externe du travail alors que les deux tiers sont dus à des promotions. De plus, nous ne trouvons aucun signe de recours à des stratégies de type turnover en excès. Au contraire, les entreprises françaises utilisent beaucoup la formation continue pour améliorer les compétences de leur main-d'oeuvre. Ces résultats apparaissent particulièrement forts dans le secteur manufacturier alors que les stratégies de recours au marché externe du travail sont plus fréquentes dans le secteur des services. Nous étudions ensuite les déterminants des choix réalisés par les établissements. Notre hypothèse est que le coût relatif de recours aux marchés interne et externe du travail est certainement un élément déterminant et qu'il est probablement corrélé à la taille de l'établissement d'une part et à sa localisation sur un marché du travail plus ou moins dense d'autre part. Nous montrons que les stratégies de recours au marché externe du travail sont en effet plus fréquentes lorsque les entreprises sont situées sur des marchés du travail à forte densité