Human Capital Portability and Careers in Finance

Janet Gao, Wenyu Wang and Yufeng Wu

The Review of Financial Studies, 2024, vol. 37, issue 9, 2732-2778

Abstract: How does firm-specific human capital shape careers in the finance industry? We build a dynamic model where workers accumulate portable and nonportable (firm-specific) human capital and learn about their match quality with employers. Estimating the model using granular data on M&A advisory bankers, we show that a large fraction of bankers’ human capital is nonportable, ranging from 12% to 46% across different firm types. Bankers make a dynamic trade-off between portability and returns on human capital, leading to time-varying job preferences over their life cycle. Our results have broad implications for careers in finance and the provision of financial services.

Keywords: J20; J24; J44; J63; G24; G34 (search for similar items in EconPapers)
Date: 2024
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