MANAGERIAL HUSBANDRY AND THE DYNAMICS OF ONGOING HIERARCHIES

This paper studies the supply and demand for on-the-job training where the success of training is stochastic, firms have strictly concave pr oduction functions and they have to pay hiring costs for employing ski lled workers from the outside. The model explains how two commonly obs erved personnel regimes, up or out rules and fast track jobs may simul taneously operate in the same industry. There are predictions about fi rm level dynamics and interactions between labor mobility and firm per formance. The model also generates intermittent labor market events su ch as lateral mobility, promotions, layoffs and variation in earnings across identically skilled workers.