Job raiding raises human capital investments

Kris Boschmans and Jan Bouckaert

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: This paper studies job raiding and its effect on incentives to invest in human capital. A firm can offer more attractive wages to new hires than to its current employees, thereby raiding a rival’s workers. Our model shows that firms prefer to raid in equilibrium when given the opportunity to do so. As rational workers foresee that job raids increase expected job earnings, they are willing to increase their ex ante investment in human capital. This insight has important implications for any industry where human capital is a scarce input and important aspects of personnel output are observable. Examples include the publications of academic researchers, the performance of professional athletes, and lawsuits won by lawyers. Our conclusions indicate that limiting organizations’ freedom to offer higher wages to new hires vis-à-vis equally productive incumbent employees inhibits investments in human capital.

Keywords: Job raiding; Human capital; Labor markets (search for similar items in EconPapers)
JEL-codes: J63 L13 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2004-04
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://repository.uantwerpen.be/docman/irua/31c5db/f122f666.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2004005

Access Statistics for this paper

More papers in Working Papers from University of Antwerp, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Joeri Nys ().