Human Capital Portability and Worker Career Choices: Evidence from M&A Bankers

55 Pages Posted: 23 Nov 2020 Last revised: 26 May 2021

See all articles by Janet Gao

Janet Gao

Indiana University - Kelley School of Business

Wenyu Wang

Indiana University - Kelley School of Business - Department of Finance

Yufeng Wu

University of Illinois at Urbana-Champaign - Department of Finance

Date Written: November 3, 2020

Abstract

We quantify the importance of firm-specific human capital in explaining workers' career choices using data in the M&A advisory industry. We develop a model that allows bankers to accumulate both portable and non-portable human capital through their work experience and learn about their match quality with current employers over time. We also allow bankers to choose between working for bulge bracket and boutique firms, which offer different levels of portability and production efficiency. Our estimation suggests that, despite performing homogeneous tasks, bankers accumulate substantial non-portable human capital. Bankers in boutique firms acquire fewer portable skills but enjoy higher efficiency. Such a trade-off affects how human capital is allocated within the industry. For example, bankers start their careers in bulge bracket firms but later migrate to boutiques. We find evidence consistent with those predictions.

Keywords: labor mobility, human capital portability, career path, M&A advisor

JEL Classification: C51, G24, J60, L22

Suggested Citation

Gao, Janet and Wang, Wenyu and Wu, Yufeng, Human Capital Portability and Worker Career Choices: Evidence from M&A Bankers (November 3, 2020). Available at SSRN: https://ssrn.com/abstract=3724657 or http://dx.doi.org/10.2139/ssrn.3724657

Janet Gao

Indiana University - Kelley School of Business ( email )

1309 East Tenth Street
Indianapolis, IN 47405-1701
United States

Wenyu Wang (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

Yufeng Wu

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

HOME PAGE: http://https://business.illinois.edu/profile/yufeng-wu2/

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