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The sale of relational capital through tenure profiles and tournaments

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  • Frijters, Paul

Abstract

In this paper, a specific form of human capital is analyzed, relational capital, which consists of matches between market parties. Search and information costs make these matches valuable to both parties. Its peculiarity is that the control over such matches is transferred within firms from those who initially control it to anyone who works with it for a period. This characteristic allows someone who approaches the end of his working life to sell his relational capital to junior partners. This sale can explain upward sloping tenure profiles and can result in tournaments if juniors are budget constrained and perfect contracting is not possible. The need to keep the amount of relational capital constant implies a generation balanced workforce within each firm.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 7 (2000)
Issue (Month): 4 (July)
Pages: 373-384

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Handle: RePEc:eee:labeco:v:7:y:2000:i:4:p:373-384

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References

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  1. Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 606-28, October.
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  8. Laffond G. & Laslier J. F. & Le Breton M., 1993. "The Bipartisan Set of a Tournament Game," Games and Economic Behavior, Elsevier, vol. 5(1), pages 182-201, January.
  9. Peter D. Sherer, 1995. "Leveraging human assets in law firms: Human capital structures and organizational capabilities," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 671-691, July.
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Cited by:
  1. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
  2. Bezemer, Dirk & Dulleck, Uwe & Frijters, Paul, 2005. "Social Capital, Creative Destruction and Economic Development," Research Report 05C09, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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