Predicting Labor Market Competition: Leveraging Interfirm Network and Employee Skills

Information Systems Research, Forthcoming

51 Pages Posted: 23 Jun 2020

See all articles by Yuanyang Liu

Yuanyang Liu

University of Tennessee, Knoxville

Gautam Pant

University of Iowa - Department of Business Analytics

Olivia R. Liu Sheng

University of Utah - David Eccles School of Business

Date Written: May 30, 2020

Abstract

Human capital is a key component of the knowledge economy that firms compete for in the labor market. Compared to the product market competition, the identification and prediction of labor market competitors have garnered little attention in the literature. In this study, we perform an interfirm labor market competitor analysis with a unique longitudinal employer-employee matched dataset derived from online profiles of 89,943 employees, tracking their career over 3,467 public firms from the years 2000 to 2014. Using employee migrations across firms, we derive and analyze a human capital flow network. We leverage this network to extract global cues about interfirm human capital overlap through structural equivalence and community classification. The online employee profiles also provide rich data on the explicit knowledge base of firms. In particular, they allow us to represent firms in the space of the skills possessed by its employees and measure the interfirm human capital overlap in terms of similarity in their employees' skills. We validate our proposed human capital overlap metrics in a predictive analytics framework using future employee migrations as an indicator of labor market competition. The results show that our proposed metrics have superior predictive power over conventional firm-level economic and human resource measures. We also demonstrate how our proposed metrics and the prediction framework can be incorporated into a comprehensive competitor analysis that includes both product and labor overlap between firms.

Keywords: competitor analysis, human capital, text mining, network analysis, machine learning

Suggested Citation

Liu, Yuanyang and Pant, Gautam and Sheng, Olivia R. Liu, Predicting Labor Market Competition: Leveraging Interfirm Network and Employee Skills (May 30, 2020). Information Systems Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3614788

Yuanyang Liu (Contact Author)

University of Tennessee, Knoxville ( email )

Department of Business Analytics and Statistics
Knoxville, TN 37916
United States

HOME PAGE: http://https://sites.google.com/site/yuanyangliuhome

Gautam Pant

University of Iowa - Department of Business Analytics ( 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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