Skilled Labor Risk and Corporate Policies

44 Pages Posted: 20 Mar 2017 Last revised: 2 Mar 2021

See all articles by Yue Qiu

Yue Qiu

Temple University

Tracy Yue Wang

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: February 28, 2021

Abstract

We measure U.S. publicly traded companies’ skilled labor risk, i.e., the potential failure in attracting and retaining skilled labor, by the intensity of their discussions on this issue in their 10-K filings. We show that this measure effectively captures firm risk due to the mobility of skilled labor. We find that the skilled labor risk is an important determinant of compensation policy for the rank-and-file skilled labor. An increase from the 25th percentile to the 75th percentile in the skilled labor risk would increase the skilled labor wage by 22% relative to the sample mean or a premium of $15,593, and also leads to a substantially higher equity-based incentive pay. The skilled labor risk also interacts with other corporate policies such as financial leverage, cash holdings, and M&As, particularly in high-skill industries.

Keywords: Skilled labor, labor mobility, labor skill, incentive pay, compensation, H-1B, leverage, cash holding, M&A

JEL Classification: G30, G32, G34, H20, J20, J24, J40, J41

Suggested Citation

Qiu, Yue and Wang, Tracy Yue, Skilled Labor Risk and Corporate Policies (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=2935378 or http://dx.doi.org/10.2139/ssrn.2935378

Yue Qiu

Temple University ( email )

Philadelphia, PA 19122
United States

Tracy Yue Wang (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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