The sale of relational capital through tenure profiles and tournaments
AbstractIn 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 InfoPaper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 443.
Date of creation: 1998
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Other versions of this item:
- Frijters, Paul, 2000. "The sale of relational capital through tenure profiles and tournaments," Labour Economics, Elsevier, Elsevier, vol. 7(4), pages 373-384, July.
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