Job Tasks, Skill Formation, and Wages: An Internal Labor Market Approach

This study highlighted the institutional aspects of the task approach and quantitatively showed the mechanisms of tasks, skills, and wage determination through the operations of the internal labor market. As a skill measure, intellectual skills to deal with changes and problems in the workplace were employed. Using an original survey from Japan, it was found that the internal labor market-oriented skill formation system affects task allocation. The most important finding was that task polarization occurs through the skill-formation system as a subsystem of internal labor market. This result suggests the possibility of controlling task distribution through internal labor market design. Furthermore, we found that non-routine tasks positively affect intellectual skills. Finally, in estimating the wage function, we found that abstract task increases wages, while routine and manual tasks decreases wages. This result is consistent with previous studies and robust regardless of skill measure controls. Our findings suggest that task polarization and wage returns of tasks in previous studies can be interpreted from the aspects of internal labor market, and the importance of model analysis from such perspectives in the future.