One limitation of the analysis comes from the fact that survey data includes many heteroge-
nous firms. While the analysis controls for the main characteristics of firms, it does not address
the question of unobserved firm heterogeneity which may play a significant role in the deter-
mination of the wage and mobility processes inside firms. Using matched employer-employee
data would make it possible to correct for that aspect.
The model of Gibbons and Waldman is based on the assumption that all firms are identical
with the same production technology and hierarchical job structure. Future research could
investigate the possibility that firms of different size differ in their internal organization as
suggested by the empirical evidence on the impact of firm size on wage outcomes (see for
example Brown and Medoff (1989) and Abowd, Kramarz and Margolis (1999)). In this case,
the productivity of a given worker-job-level match would be different in large and small firms.
26
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