Information and Human Capital Management

Stern School of Business Economics Working Paper Series

34 Pages Posted: 1 Nov 2007

See all articles by Heski Bar-Isaac

Heski Bar-Isaac

University of Toronto - Rotman School of Management

Ian Jewitt

University of Oxford - Department of Economics; National Bureau of Economic Research (NBER)

Clare Leaver

University of Oxford

Date Written: October 2007

Abstract

An increasingly important organisational design problem for many firms is to recoup general human capital rents while maintaining attractive career prospects for workers. We explore the role of information management in this context. In our model, an information management policy determines the statistic of worker performance that will be available to outside recruiters. Choosing different statistics affects the extent of regression to the mean which, we show, in turn affects the incidence of adverse selection among retained and released workers. Using this observation, we detail how optimal information management policies vary across firms with different human capital management priorities. This view of human capital management via information management has strong implications for labour market outcomes. We discuss the impact on average wages, wage inequality, wage skewness and labour turnover rates.

Keywords: human capital, information disclosure, regression to the mean, adverse selection, turnover, wage distribution, human resource management

JEL Classification: D82, J24, L21

Suggested Citation

Bar-Isaac, Heski and Jewitt, Ian D. and Leaver, Clare, Information and Human Capital Management (October 2007). Stern School of Business Economics Working Paper Series, Available at SSRN: https://ssrn.com/abstract=1026300 or http://dx.doi.org/10.2139/ssrn.1026300

Heski Bar-Isaac (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416 978 3626 (Phone)

HOME PAGE: http://https://sites.google.com/site/heskibarisaac/home

Ian D. Jewitt

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom
+44 1865 278698 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Clare Leaver

University of Oxford ( email )

Department of Economics
Manor Road Building
Oxford, Oxfordshire OX1 3UQ
United Kingdom
44(0)1865 271952 (Phone)

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