Human Capital Reallocation Across Firms: Evidence from Idiosyncratic Shocks
62 Pages Posted: 2 Sep 2021 Last revised: 3 Oct 2023
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Human Capital Reallocation Across Firms: Evidence from Idiosyncratic Shocks
Human Capital Reallocation Across Firms: Evidence from Idiosyncratic Shocks
Date Written: August 14, 2021
Abstract
We study human capital reallocation following firm-specific idiosyncratic shocks. We analyze relegation battles in the English Premier League as this setting offers well-identified idiosyncratic shocks as well as both individual-level and firm-level productivity metrics. Following a negative idiosyncratic shock, we find that relatively more productive players move to more productive clubs and maintain their long-term productivity. They get replaced with lower productivity players. Overall, our results show that in a setting with highly transferable and observable skills, idiosyncratic shocks lead to a reallocation of human capital that moves the industry towards a better overall match between individual-level and firm-level productivity.
Keywords: Idiosyncratic shock, human capital, reallocation, productivity, English Premier League, relegation
JEL Classification: G31, G32, G33, J24
Suggested Citation: Suggested Citation