Are Skills Firm-Specific? Evidence From Danish Micro Data

Abstract:

This paper studies the relationship between the probability of job change and tenure. Theory about worker-firm specific capital predicts that the job change hazard declines with time on the job, and this has frequently been confirmed by empirical evidence. However, it is shown that if much worker heterogeneity is accounted for, then the job change hazard is constant through the first 5-6 years of tenure, after which it declines. This dismisses the role of firm-specific human capital in the first several years of employment relationships. Further, if a distinction between within and between industry job changes is made, then evidence for industry-specific capital is found. Also, support is found for a new “skill-weights” approach to human capital in which all skills are general, cf. Lazear (2003).