Job raiding raises human capital investments
AbstractThis paper studies job raiding and its effect on incentives to invest in human capital. A firm can offer more attractive wages to new hires than to its current employees, thereby raiding a rival’s workers. Our model shows that firms prefer to raid in equilibrium when given the opportunity to do so. As rational workers foresee that job raids increase expected job earnings, they are willing to increase their ex ante investment in human capital. This insight has important implications for any industry where human capital is a scarce input and important aspects of personnel output are observable. Examples include the publications of academic researchers, the performance of professional athletes, and lawsuits won by lawyers. Our conclusions indicate that limiting organizations’ freedom to offer higher wages to new hires vis-à-vis equally productive incumbent employees inhibits investments in human capital.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2004005.
Length: 48 pages
Date of creation: Apr 2004
Date of revision:
Contact details of provider:
Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-02 (All new papers)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joeri Nys).
If references are entirely missing, you can add them using this form.