Internal labor markets are more likely to occur when:
A)principal-agent problems are absent
B)firms expect a high rate of turnover and low hiring costs
C)workers at a particular firm require general training
D)workers at a particular firm require specific training

Question

Quizplus · Accepted Answer

Internal labor markets occur when firms invest in specific training for their workers in order to increase their human capital. This specialized training creates a barrier to entry for external candidates, making it more cost-effective for the firm to promote from within. Therefore, internal labor markets are more likely to occur when workers at a particular firm require specific training.

Internal Labor Markets Are More Likely to Occur When