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Specific Capital and Technological Variety

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  • Boyan Jovanovic
  • Peter L. Rousseau

Abstract

Growth of technological variety offers more scope for the division of labor. And when a division of labor requires some specific training, the technological specificity of human capital grows, and, with it, probably the firm specificity of that capital grows. We build a simple model that captures this observation. The model implies that a rising specialization of human and physical capital raises the rents in the average match between a firm and its human and physical capital. We document that in the last 40 years the firm’s share of those rents has also grown, and we use the model to explain why this shift may have taken place.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Human Capital.

Volume (Year): 2 (2008)
Issue (Month): 2 ()
Pages: 129-152

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Handle: RePEc:ucp:jhucap:v:2:i:2:y:2008:p:129-152

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Cited by:
  1. Poschke, Markus, 2014. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," IZA Discussion Papers 7991, Institute for the Study of Labor (IZA).
  2. Hanno Lustig & Chad Syverson & Stijn Van Nieuwerburgh, 2009. "Technological Change and the Growing Inequality in Managerial Compensation," NBER Working Papers 14661, National Bureau of Economic Research, Inc.

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