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 production functions and they have to pay hiring costs for employing skilled workers from the outside. The model explains how two commonly observed personnel regimes, up or out rules and fast track jobs may simultaneously operate in the same industry. There are predictions about firm level dynamics and interactions between labor mobility and firm performance. The model also generates intermittent labor market events such as lateral mobility, promotions, layoffs and variation in earnings across identically skilled workers. Keywords: On-the-job training; Hiring cost; Firm growth; Inter and intra firm mobility; Up or out rules; Fast track jobs