This article is principally a case study establishing the existence of an internal labour market in British Rail, and its significance for the long‐term wage structure. Drawing on the work of Doeringer and Piore it outlines the advantages that internal labour markets would be expected to offer both employers and employees, and the implications which these have for the process of wage determination. It briefly reviews previous case studies supporting the importance of the role of comparisons, both internal and external, in wage bargaining; and then turns to the study of British Rail. Finding the characteristics expected of an internal labour market, it then establishes that the wage structure of the industry has demonstrated a considerable degree of stability over the period 1950‐85, despite considerable changes in relative productivities. This degree of consistency is regarded as being difficult to reconcile with the dominance of market forces in wage determination.
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