Skilled Labor Risk and Compensation Policies

48 Pages Posted: 20 Mar 2017 Last revised: 31 Jan 2019

See all articles by Yue Qiu

Yue Qiu

Temple University

Tracy Yue Wang

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: January 28, 2018

Abstract

We measure U.S. publicly traded companies’ exposures to 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 skilled labor’s outside options are industry-specific and local. Also, skilled labor risk is an important determinant of compensation policy for skilled labor. A one-standard-deviation increase in skilled labor risk would increase the skilled labor wage by 15% relative to the sample mean or a premium of $13,578, and the premium increases with the level of labor skill. Skilled labor’s compensation is also structured substantially more towards equity-based incentive pay, consistent with the theoretical predictions.

Keywords: Skilled labor, key talent, labor mobility, labor skill, incentive pay, compensation, benefits

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

Suggested Citation

Qiu, Yue and Wang, Tracy Yue, Skilled Labor Risk and Compensation Policies (January 28, 2018). 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

Register to save articles to
your library

Register

Paper statistics

Downloads
291
rank
101,795
Abstract Views
991
PlumX Metrics