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Capital Age and Labor Investment Efficiency

Author

Listed:
  • Singh, Amanjot

    (King’s University College at Western University London, Ontario, Canada)

Abstract

This study examines how capital age affects the efficiency of corporate labor investments. Using a sample of 1,588 US firms from 1991 to 2016, we find that the efficiency of labor investments increases as technology ages. Subsample analysis on labor investment efficiency suggests that old capital decreases labor over- and underinvestment. Our results remain robust to alternative specifications and restricted to small firms and industries requiring high labor skills. These findings add to the growing literature examining how learning affects a variety of phenomena in finance. Managers' increased understanding of their capital over time facilitates the efficiency of corporate labor investments.

Suggested Citation

  • Singh, Amanjot, 2023. "Capital Age and Labor Investment Efficiency," American Business Review, Pompea College of Business, University of New Haven, vol. 26(2), pages 448-457, November.
    • Handle: RePEc:ris:ambsrv:0087
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    File URL: https://digitalcommons.newhaven.edu/americanbusinessreview/vol26/iss2/8/
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    More about this item

    Keywords

    Capital Age; Investment Efficiency; Labor Investment;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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