Abstract: Internal labor market in university is segmented into several independent and closed sections with identity, position and department, which affects the internal labor reallocation and division, and further, the efficiency of internal labor market. In the article, it is pointed out that identity segmentation degrades the efficiency of factor mobility and allocation, position segmentation increases the efficiency of labor division, department division increases the efficiency of professionals division, but to some degree, degrades the efficiency of manager allocation through the limited competition within internal departments. According to the internal labor market theory, optimization of internal operation regulation does benefit to increase the efficiency of factor allocation, which inspires the reform of personnel management in universities.