Predicting Interfirm Human Capital Flow: Leveraging Networks and Heterogeneous Effects

49 Pages Posted: 16 Apr 2018  

Yuanyang Liu

University of Iowa - Department of Management Sciences

Gautam Pant

University of Iowa - Department of Management Sciences

Olivia R. Liu Sheng

University of Utah - David Eccles School of Business

Date Written: March 30, 2018

Abstract

Firms compete for human capital which is a key component of the knowledge economy. The ability to predict the flow of human capital between firms affords firms' managers and recruiters, investors, market analysts as well as policy makers actionable insights. The web presence of employees through their LinkedIn profiles establishes a rich data source for analyzing the interactions between firms via their employees’ job changes over time. In particular, we model and study such interactions as a network of employee migrations between firms with the goal of predicting the future interfirm human capital flow. For this purpose, we track the movement of 89,943 individuals over 3,467 public firms from the years 2000 to 2014. The granular nature of this employee-level data allows us to propose new metrics such as the similarity between firms in the space of the skills possessed by its employees. At the same time, we exploit the network representation of the labor market to propose metrics with global cues on human capital flows that are not available through local firm-level variables. In addition to providing accurate predictions, we are also interested in potential explanations that can inform theory and practice. For this reason, we experiment with the causal tree algorithms which were originally designed for estimating heterogeneous treatment effects. We provide a framework for using these new class of algorithms for effective predictive modeling while also using the resulting tree-structure to provide insights on the human capital flow between firms.

Keywords: predictive analytics, human capital, network analysis, machine learning

Suggested Citation

Liu, Yuanyang and Pant, Gautam and Sheng, Olivia R. Liu, Predicting Interfirm Human Capital Flow: Leveraging Networks and Heterogeneous Effects (March 30, 2018). Available at SSRN: https://ssrn.com/abstract=3153045 or http://dx.doi.org/10.2139/ssrn.3153045

Yuanyang Liu (Contact Author)

University of Iowa - Department of Management Sciences ( email )

IA
United States

Gautam Pant

University of Iowa - Department of Management Sciences ( email )

IA
United States

Olivia R. Liu Sheng

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
801-585-9071 (Phone)

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