Working Paper: NBER ID: w13998
Authors: Boyan Jovanovic; Peter L. Rousseau
Abstract: Growth of technological variety offers more scope for the division of labor. And when a division of labor requires some specific training, the technological specificity of human capital grows and, with it, probably the firm specificity of that capital. We build a simple model that captures this observation. The model implies that a rising specialization of human and physical capital raises the rents in the average match between a firm and its human and physical capital. We document that in the last 40 years the firm's share of those rents has also grown, and we use the model to explain why this shift may have taken place.
Keywords: Technological Variety; Human Capital; Firm Specificity; Division of Labor
JEL Codes: O00; O04
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological Variety (O33) | Division of Labor (L23) |
| Division of Labor (L23) | Human Capital Specificity (J24) |
| Technological Variety (O33) | Human Capital Specificity (J24) |
| Human Capital Specificity (J24) | Firm Specificity of Capital (D25) |
| Firm Specificity of Capital (D25) | Firm Earnings (D22) |
| Technological Variety (O33) | Firm Earnings (D22) |