Internal Labor Market

In a firm with multiple hierarchical levels, we find that managers are incentivized to engage in talent hoarding. While managerial bonuses and job rotation policies may prevent talent hoarding, the existence of a subset of more visible workers could increase the likelihood of talent hoarding.

We identify that in team production settings, peer performances increase as they are exposed over time to superstars, indicating a positive dynamic spillover effect. Moreover, these spillovers are observed in the skill dimensions of peers that complement those of the superstars.