Capital Age and Labor Investment Efficiency

Amanjot Singh
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Amanjot Singh: King’s University College at Western University London, Ontario, Canada

American Business Review, 2023, vol. 26, issue 2, 448-457

Abstract: This study examines how capital age affects the efficiency of corporate labor investments. Using a sample of 1,588 US firms from 1991 to 2016, we find that the efficiency of labor investments increases as technology ages. Subsample analysis on labor investment efficiency suggests that old capital decreases labor over- and underinvestment. Our results remain robust to alternative specifications and restricted to small firms and industries requiring high labor skills. These findings add to the growing literature examining how learning affects a variety of phenomena in finance. Managers' increased understanding of their capital over time facilitates the efficiency of corporate labor investments.

Keywords: Capital Age; Investment Efficiency; Labor Investment (search for similar items in EconPapers)
JEL-codes: D24 E22 E24 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ambsrv:0087

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