I haven't seen this posted yet but as a hiring manager it's because of accounting/budgeting.

Hiring budgets are much larger than retainment budgets. At the end of the year, accounting will determine they are going to give an x% across the board and if you want to give someone more than that - you need to make a business case to pay/promote that person more than everyone else.

However if that same person quits, HR will do an analysis and give me a range that I can pay someone to hire for that same role.

For example: let's say I have an employee that makes 100k, the standard increase is 3k but I want to get them to 110k. I have to jump through hoops to try and get that promotion through and it still might not get approved.

However if that person leaves, I'll get a budget from HR that says that role typically pays 80-120k. I can go and hire someone for 120k (10k more than I was trying to push through) without any issues. No business case etc. - when it comes from HR - these new funding requests are auto-approved because "the market" says that's what we should be paying, which is easier than me as an individual arguing someone should make more. This is also one of the reasons why you can leverage another offer into more pay at your current company - because the market says you're worth more.

Most businesses aren't going to pay you more than someone else thinks you're worth. Not saying any of this is right, just what I have observed.