Title
Job raiding raises human capital investmentsJob raiding raises human capital investments
Author
Faculty/Department
Faculty of Applied Economics
Research group
Economics
Publication type
report
Publication
Antwerp :UA, [*]
Source (series)
Research paper / UA, Faculteit TEW ; 2004:5
Volume/pages
47 p.
1
Carrier
E
Target language
English (eng)
Affiliation
University of Antwerp
Abstract
This paper studies job raiding and its effect on incentives to invest in human capital. A firm can offer more attractive wages to new hires than to its current employees, thereby raiding a rivals workers. Our model shows that firms prefer to raid in equilibrium when given the opportunity to do so. As rational workers foresee that job raids increase expected job earnings, they are willing to increase their ex ante investment in human capital. This insight has important implications for any industry where human capital is a scarce input and important aspects of personnel output are observable. Examples include the publications of academic researchers, the performance of professional athletes, and lawsuits won by lawyers. Our conclusions indicate that limiting organizations freedom to offer higher wages to new hires vis-à-vis equally productive incumbent employees inhibits investments in human capital.
Full text (open access)
https://repository.uantwerpen.be/docman/irua/31c5db/f122f666.pdf
Handle