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

Abstract

How does firm-specific human capital shape workers’ career trajectories? We develop a model where workers accumulate both portable and non-portable (firm-specific) human capital and learn about their match quality with employers gradually. The model is estimated using granular data on M&A bankers in bulge bracket and boutique firms. We show that a large fraction of bankers’ human capital is non-portable, ranging from 12% to 44% across firms. Bankers make dynamic tradeoff between portability and returns on human capital, leading to time-varying job preferences over their life cycle. Our results have implications for high-skill workers in human capital-intensive industries in general.

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

JEL Classification: C51, G24, J60, L22