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Investing in talent development: Theory and applications

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  • Thomas J. Miceli

Abstract

This paper examines contractual arrangements in employment settings in which employers have to invest in development of employees, and the benefits of that training are at least partially transferrable to rival employers. The problem is how to incentivize firms to make the necessary investments when employees cannot self‐finance due to liquidity constraints and/or a low probability of success. Applications of the model include rules that once governed employment relations in major league baseball and Hollywood filmmaking, and noncompete clauses that limit the outside options of departing employees. The conclusions are also applied to the problem of financing of college costs.

Suggested Citation

  • Thomas J. Miceli, 2022. "Investing in talent development: Theory and applications," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1641-1650, September.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:6:p:1641-1650
    DOI: 10.1002/mde.3530
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    References listed on IDEAS

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    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 79-119.
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    5. F. Andrew Hanssen & Alexander Raskovich, 2020. "Does Vertical Integration Spur Investment? Casting Actors to Discover Stars during the Hollywood Studio Era," Journal of Law and Economics, University of Chicago Press, vol. 63(4), pages 631-666.
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    7. F. Andrew Hanssen, 2010. "Vertical Integration during the Hollywood Studio Era," Journal of Law and Economics, University of Chicago Press, vol. 53(3), pages 519-543.
    8. Thomas J. Miceli, 2004. "A Principal-Agent Model of Contracting in Major League Baseball," Journal of Sports Economics, , vol. 5(2), pages 213-220, May.
    9. Sappington, David, 1983. "Limited liability contracts between principal and agent," Journal of Economic Theory, Elsevier, vol. 29(1), pages 1-21, February.
    10. F. Andrew Hanssen & James W. Meehan Jr & Thomas J. Miceli, 2016. "Explaining Changes in Organizational Form," Journal of Sports Economics, , vol. 17(6), pages 523-557, August.
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    Cited by:

    1. Sandra Misiak-Kwit & Katarzyna Wlodarczyk & Ewa Mazur-Wierzbicka & Lukas Smerek & Jozef Durian, 2023. "The Human Resources Management System in Slovakia and Poland – Chosen Aspects," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 20-39.

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