Specificity Versus Replaceability: The Relationship between Skills and Preferences for Job Security Regulations

Abstract:     
This article explores the relationship between skills and preferences for job security regulations. Two contrasting arguments are examined: the relative skill specificity thesis advanced by Iversen and Soskice [Iversen, T. and Soskice, D. (2001) ‘An Asset Theory of Social Policy Preferences’, American Political Science Review, 95, 875-893] and the replaceability thesis propounded by Goldthorpe [Goldthorpe, J. H. (2000) On Sociology. Numbers, Narratives, and the Integration of Research and Theory, New York, Oxford University Press]. Both arguments are based on the concept of asset specificity from transaction cost economics. However, they offer conflicting expectations. Iversen and Soskice expect employees with relatively specific skills to demand more job security regulations so as to increase the likelihood that there will be a return on investment. In contrast, Goldthorpe's reasoning implies that employees with very specific skills are difficult to replace. Consequently, they are less concerned about their job security than employees with few specific skills. Analysis of survey data lends support to Goldthorpe's replaceability thesis.

Keywords: class, human capital, labor market institutions, regulation, skills, varieties of capitalism, D86 economics of contract: theory, J24 human capital, skills, occupational choice, labor productivity, J63 turnover, vacancies, layoffs

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