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Long-Term Attachments and Long-Run Firm Rates of Return

  • Orazem, Peter
  • Bouillon, Marvin
  • Doran, B. Michael

Long-term attachments between workers and firms are common. Numerous studies have examined worker returns to tenure, but little is known of firm returns to firm-worker matches. Yet, these attachments represent a human capital asset quasi-held by the firm which is not captured by traditional accounting measures of firm assets. Firms with large quasi-holdings of human capital will have higher measured return on assets, other things equal. Analysis of data on 250 large manufacturing firms supports the view that firms profit from long-term attachments with their workers. Consequently, unmeasured human capital assets contribute to the explanation of persistence in measured long-run excess profits across firms.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11577.

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Date of creation: 01 Oct 2004
Date of revision:
Publication status: Published in Southern Economic Journal, October 2004, vol. 71 no. 2, pp. 314-333
Handle: RePEc:isu:genres:11577
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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