Investment in Human Capital and Labor Mobility: Evidence from a Shock to Property Rights

56 Pages Posted: 3 Nov 2017 Last revised: 3 Jun 2019

Date Written: November 2, 2017

Abstract

We study the effect of labor mobility on employee behavior in the industry for financial advice. Our identification comes from staggered firm-level entry into the Protocol for Broker Recruiting that effectively transfers ownership of client relationships to the advisor; increasing advisor labor mobility. After the shock, advisors invest more in general human capital, but less in firm-specific human capital. Further, treated advisors raise more assets and garner fewer customer complaints, suggesting that they take better care of relationship assets after ownership transfer. Our findings support property rights-based investment theories of human capital and document offsetting costs to restricting labor mobility.

Keywords: Property Rights, Labor Mobility, Financial Advisors, Non-Solicitation Agreements, Protocol for Broker Recruiting

JEL Classification: G24, J44, J60, K31, L22

Suggested Citation

Clifford, Christopher P. and Gerken, William Christopher, Investment in Human Capital and Labor Mobility: Evidence from a Shock to Property Rights (November 2, 2017). Available at SSRN: https://ssrn.com/abstract=3064204 or http://dx.doi.org/10.2139/ssrn.3064204

Christopher P. Clifford

University of Kentucky ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States
859-257-3850 (Phone)

William Christopher Gerken (Contact Author)

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

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