Predicting Labor Market Competition: Leveraging Interfirm Network and Employee Skills

Yuanyang Liu (), Gautam Pant () and Olivia R. L. Sheng ()
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Yuanyang Liu: Department of Business Analytics and Statistics, Haslam College of Business, University of Tennessee, Knoxville, Tennessee 37996
Gautam Pant: Department of Business Analytics, University of Iowa, Iowa City, Iowa 52242
Olivia R. L. Sheng: Department of Operations and Information Systems, University of Utah, Salt Lake City, Utah 84112

Information Systems Research, 2020, vol. 31, issue 4, 1443-1466

Abstract: Human capital is a key component of the knowledge economy that firms compete for in the labor market. Compared with the product market competition, the identification and prediction of labor market competitors have garnered little attention in the literature. In this study, we perform an interfirm labor market competitor analysis with a unique longitudinal employer-employee matched data set derived from online profiles of 89,943 employees, tracking their careers in 3,467 public firms from the years 2000 to 2014. Using employee migrations across firms, we derive and analyze a human capital flow network. We leverage this network to extract global cues about interfirm human capital overlap through structural equivalence and community classification. The online employee profiles also provide rich data on the explicit knowledge base of firms. In particular, they allow us to represent firms in the space of the skills possessed by their employees and measure the interfirm human capital overlap in terms of similarity in their employees’ skills. We validate our proposed human capital overlap metrics in a predictive analytics framework using future employee migrations as an indicator of labor market competition. The results show that our proposed metrics have superior predictive power over conventional firm-level economic and human resource measures. We also demonstrate how our proposed metrics and the prediction framework can be incorporated into a comprehensive competitor analysis that includes both product and labor overlap between firms.

Keywords: competitor analysis; human capital; text mining; network analysis; machine learning (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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