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Human Capital and Career Success: Evidence from Linked Employer-Employee Data

Author

Listed:
  • Frederiksen, Anders

    () (Aarhus University)

  • Kato, Takao

    () (Colgate University)

Abstract

Denmark's registry data provide accurate and complete career history data along with detailed personal characteristics (e.g., education, gender, work experience, tenure and others) for the population of Danish workers longitudinally. By using such data from 1992 to 2002, we provide rigorous evidence for the first time for the population of workers in an entire economy (as opposed to case study evidence) on the effects of the nature and scope of human capital on career success (measured by appointments to top management). First, we confirm the beneficial effect of acquiring general human capital formally through schooling for career success, as well as the gender gap in career success rates. Second, broadening the scope of human capital by experiencing various occupations (becoming a generalist) is found to be advantageous for career success. Third, initial human capital earned through formal schooling and subsequent human capital obtained informally on the job are found to be complements in the production of career success. Fourth, though there is a large body of the literature on the relationship between firm-specific human capital and wages, the relative value of firm-specific human capital has been rarely studied in the context of career success. We find that it is more beneficial to broaden the breadth of human capital within the firm than without, pointing to the significance of firm-specific human capital for career success.

Suggested Citation

  • Frederiksen, Anders & Kato, Takao, 2011. "Human Capital and Career Success: Evidence from Linked Employer-Employee Data," IZA Discussion Papers 5764, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5764
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    References listed on IDEAS

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    1. Francine Blau & Jed DeVaro, 2006. "New Evidence on Gender Differences in Promotion Rates: An Empirical Analysis of a Sample of New Hires," Working Papers 891, Princeton University, Department of Economics, Industrial Relations Section..
    2. Robert Gibbons & Michael Waldman, 2006. "Enriching a Theory of Wage and Promotion Dynamics inside Firms," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 59-108, January.
    3. Anders Frederiksen & Timothy Halliday & Alexander K. Koch, 2016. "Within- and Cross-Firm Mobility and Earnings Growth," ILR Review, Cornell University, ILR School, vol. 69(2), pages 320-353, March.
    4. Nina Smith & Valdemar Smith & Mette Verne, 2011. "The gender pay gap in top corporate jobs in Denmark: Glass ceilings, sticky floors or both?," International Journal of Manpower, Emerald Group Publishing, vol. 32(2), pages 156-177, May.
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    Citations

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    Cited by:

    1. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    2. Kato, Takao & Kodama, Naomi, 2017. "Women in the Workplace and Management Practices: Theory and Evidence," IZA Discussion Papers 10788, Institute for the Study of Labor (IZA).
    3. Fabio Berton & Francesco Devicienti & Lia Pacelli, 2014. "Human capital accumulation in temporary jobs: specific or general?," LABORatorio R. Revelli Working Papers Series 138, LABORatorio R. Revelli, Centre for Employment Studies.
    4. Kato, Takao & Ogawa, Hiromasa & Owan, Hideo, 2016. "Working Hours, Promotion and the Gender Gap in the Workplace," IZA Discussion Papers 10454, Institute for the Study of Labor (IZA).
    5. Gerhards, Leonie & Kosfeld, Michael, 2017. "I (Don't) Like You! But Who Cares? Gender Differences in Same Sex and Mixed Sex Teams," IZA Discussion Papers 10825, Institute for the Study of Labor (IZA).
    6. KAWAGUCHI Daiji & OWAN Hideo & TAKAHASHI Kazuteru, 2016. "Working Hours, Promotion, and Gender Gaps in the Workplace," Discussion papers 16060, Research Institute of Economy, Trade and Industry (RIETI).
    7. Atolia, Manoj & Kurokawa, Yoshinori, 2016. "The impact of trade margins on the skill premium: Evidence from Mexico," Journal of Policy Modeling, Elsevier, vol. 38(5), pages 895-915.
    8. Smith, Nina & Smith, Valdemar & Verner, Mette, 2011. "Why Are So Few Females Promoted into CEO and Vice-President Positions? Danish Empirical Evidence 1997-2007," IZA Discussion Papers 5961, Institute for the Study of Labor (IZA).
    9. Jed DeVaro, 2016. "Internal hiring or external recruitment?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 237-237, February.
    10. Erik Grönqvist & Erik Lindqvist, 2016. "The Making of a Manager: Evidence from Military Officer Training," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 869-898.
    11. Dato, Simon & Grunewald, Andreas & Kräkel, Matthias & Müller, Daniel, 2016. "Asymmetric employer information, promotions, and the wage policy of firms," Games and Economic Behavior, Elsevier, vol. 100(C), pages 273-300.
    12. SATO Kaori & HASHIMOTO Yuki & OWAN Hideo, 2017. "Gender Differences in Careers," Discussion papers 17051, Research Institute of Economy, Trade and Industry (RIETI).
    13. Manoj Atolia & Yoshinori Kurokawa, 2014. "Entry Costs, Task Variety, and Skill Flexibility: A Simple Theory of (Top) Income Skewness," Tsukuba Economics Working Papers 2014-001, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba, revised Apr 2015.
    14. Hideo Owan & Shingo Takahashi & Tsuyoshi Tsuru & Katsuhito Uehara, 2014. "Finding good managers: an econometric case study of a large Japanese auto dealership," Working Papers EMS_2014_08, Research Institute, International University of Japan.
    15. Sergey Roshchin & Victor Rudakov, 2015. "Do Starting Salaries for Graduates Measure the Quality of Education? A Review of Studies by Russian and Foreign Authors," Educational Studies, Higher School of Economics, issue 1, pages 137-181.

    More about this item

    Keywords

    human capital; career development; occupations; internal promotion; external recruitment; top management;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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