Why do firms hire so few top skilled workers? A model of knowledge transfer within firms

• Type: Article in International Conference Proceedings Book
• Date: 2004

Authors

Pedro Cosme da Costa Vieira (Author) FEP; Aurora Teixeira (Author) FEP

Conference proceedings International

Title: Conference on Policy Modeling - EcoMod 2004

Other information

Abstract (EN): An unquestionable theoretical argument is that a worker with high level of human capital, i.e. skilled, is not less productive than his/her low-level counterpart. In spite of this, employment figures often show that firms prefer low skilled workers. This stylised fact seems, at first glance, to translate non-optimum firm behaviour. Employers, however, argue that when workers are high skilled, they rapidly absorb firm's transferable knowledge; in order to prevent the exit of such workers, which would danger firm fitness, employers are obliged to increase their wages. To validate this argument, we propose a theoretical model with microeconomic foundations that is reduced into a logit hazard function. Data used includes around 1400 firms, spanning 1984-1992. The estimation of the theoretical model enables to legitimate employers' argument. Therefore, if fostering top skilled employment is a policy goal, labour laws should allow employers to hire workers in a long-term contractual basis, granting employers compensation rights in the event workers exit for a rival firm.

Language: Portuguese

Type (Professor's evaluation): Scientific