Working Paper: NBER ID: w9679
Authors: Edward P. Lazear
Abstract: One problem with the theory of firm-specific human capital is that it is difficult to generate convincing examples of investment that could generate the sometimes observed large and continuing effects on earnings. Another approach, called the skill-weights' view, allows all skills to be general in that there are other firms that use each of the skills. But firms use them in different combinations and with different weights attached to them. The skill-weights view not only has aesthetic appeal, but is consistent with the frequently observed large tenure effects. All of the implications of the traditional view are produced by this approach, and there are a number of other implications that distinguish the new view from the traditional one. The empirical evidence already contains some support for the skill-weights view.
Keywords: firmspecific human capital; skillweights; tenure effects; earnings functions
JEL Codes: M5; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firmspecific human capital (J24) | earnings (J31) |
| general human capital (J24) | earnings (J31) |
| skillweights approach (J24) | tenure effects in earnings (J31) |
| tenure (M51) | wage growth (J31) |
| skill investment (J24) | wage outcomes (J31) |
| tenure effect (wage growth not common to stayers and leavers) (J63) | wage growth (J31) |
| stay longer at a firm (M51) | greater wage growth (J31) |