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
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: Suggested Citation