Job Mobility and Earnings: An Internal Labour Market Analysis

The analysis of job mobility and earnings has been dominated by human capital theory. This approach has been subject to considerable criticism in recent years, particularly about the manner in which it conceptualizes the processes that take place between the start and end of a job. An alternative is the internal labour market approach, which focuses on the very processes which are so problematic for human capital theory. Information from three specially designed surveys of professional scientists in Australia and Britain suggests that the processes that are central to internal labour market theory are crucial to generating the distribution of earnings. While the evidence presented is not necessarily incompatible with human capital theory, it does suggest that future research on the earnings distribution could usefully involve the development of the internal labour market approach.