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Shareholders and Stakeholders: Human Capital and Industry Equilibrium


  • Miller, Marcus
  • Ippolito, Roberto
  • Zhang, Lei


Producing high technology output and supplying sophisticated services often involves costly investment in industry-specific skills. But the threat of poaching means that it is the individual 'stakeholder,' not the firm, who must bear the cost. The authors investigate various mechanisms for funding human capital investment in an industry equilibrium framework where capital market imperfections would, in the absence of intervention, result in underinvestment. The main result is that government provision of loan guarantees, conditional on no-bankruptcy, leads to wage hikes which raises profits in a socially inefficient manner: income contingent loans and levy subsidy schemes, meanwhile, can result in a socially efficient outcome.

Suggested Citation

  • Miller, Marcus & Ippolito, Roberto & Zhang, Lei, 1998. "Shareholders and Stakeholders: Human Capital and Industry Equilibrium," Economic Journal, Royal Economic Society, vol. 108(447), pages 490-508, March.
  • Handle: RePEc:ecj:econjl:v:108:y:1998:i:447:p:490-508

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    References listed on IDEAS

    1. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers 5281, National Bureau of Economic Research, Inc.
    2. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 640-647.
    3. Atkinson, Anthony B., 1995. "The Welfare State and Economic Performance," National Tax Journal, National Tax Association, vol. 48(2), pages 171-98, June.
    4. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    5. Atkinson,Anthony Barnes, 1996. "Incomes and the Welfare State," Cambridge Books, Cambridge University Press, number 9780521557962, March.
    6. Brunner, Johann K., 1993. "Redistribution and the efficiency of the pay-as-you-go pension system," Discussion Papers, Series I 265, University of Konstanz, Department of Economics.
    7. Atkinson, Anthony B., 1995. "The Welfare State and Economic Performance," National Tax Journal, National Tax Association, vol. 48(2), pages 171-198, June.
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    Cited by:

    1. Booth, Alison L & Francesconi, Marco & Zoega, Gylfi, 1999. "Training, Rent-Sharing and Unions," CEPR Discussion Papers 2200, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity


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