Firm Specific Human Capital as an Employer Discipline Device

Derek Laing ()

Economic Inquiry, 1994, vol. 32, issue 1, 128-37

Abstract: The inability of employers to monitor perfectly the level of effort of their employees is a potentially serious impediment to labor market efficacy. Indeed, a number of recent studies have concluded that this may lead to involuntary unemployment, an inefficient sectoral allocation of workers, and discrimination against productively identical workers. This paper shows that the lock-in effect of firm-specific human capital can help alleviate problems of worker moral hazard and thereby promote labor market performance. Copyright 1994 by Oxford University Press.

Date: 1994
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