Negative Supply Shock and Labor Mobility

Kimiko Terai
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Kimiko Terai: Keio Economic Observatory, Keio University

No 2022-012, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: *Firms obtain monopsony power by inducing employees to invest in firm-specific human capital. *By committing to seniority-based wage system, the firm can make employees to make high effort in accumulating firm-specific human capital. *The seniority-based wage system reduces labor mobility, which would harm the firm when the firm faces a negative supply shock. *With enhanced portability of corporate pensions and the reform in taxation on retirement benefits, labor mobility can be resumed, which profits the firm and increases production.

Keywords: supply shock; retirement benefits; firm-specific human capital; senioritybased wage system; labor mobility (search for similar items in EconPapers)
JEL-codes: J24 J26 J32 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2022-08-04
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