Trading on Talent: Human Capital and Firm Performance

55 Pages Posted: 12 Aug 2017 Last revised: 28 Dec 2020

See all articles by Anastassia Fedyk

Anastassia Fedyk

University of California, Berkeley - Haas School of Business

James Hodson

AI for Good; Cognism; Jožef Stefan Institute

Date Written: December 26, 2020

Abstract

How is skilled human capital reflected in firm performance? By directly observing the monthly career migration patterns of 37 million employees of US public companies, along with their education, demographics, and skills, we explore firm-level "skill premia." Our key empirical finding is that, contrary to the individual-level patterns documented by the labor economics literature, technical and social skillsets negatively forecast both financial and operational performance at the firm level. We explore several potential mechanisms for this finding. Social skillsets display counter-cyclical performance, suggesting that their negative premia reflect their risk profiles. Meanwhile, negative premia on technical skillsets show patterns consistent with over-exuberance regarding contemporaneous popular technologies: IT and Mobile Networks skillsets carry negative premia in the early 2000s, while Data Analysis, Software Engineering, and Web Development display negative premia during the 2010s.

Keywords: return predictability, asset prices, human capital, skilled labor

JEL Classification: G11, G00

Suggested Citation

Fedyk, Anastassia and Hodson, James, Trading on Talent: Human Capital and Firm Performance (December 26, 2020). Available at SSRN: https://ssrn.com/abstract=3017559 or http://dx.doi.org/10.2139/ssrn.3017559

Anastassia Fedyk

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

James Hodson (Contact Author)

AI for Good ( email )

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Cognism ( email )

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HOME PAGE: http://cognism.com

Jožef Stefan Institute ( email )

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HOME PAGE: http://ailab.ijs.si

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