Human Capital Portability and Worker Career Choices: Evidence from M&A Bankers
55 Pages Posted: 23 Nov 2020 Last revised: 26 May 2021
Date Written: November 3, 2020
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
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