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Skilled Labor Risk and Corporate Policies
[The growth of low skill service jobs and the polarization of the U.S. labor market]

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Listed:
  • Yue Qiu
  • Tracy Yue Wang

Abstract

We measure U.S. listed companies’ skilled labor risk—that is, the potential failure in attracting and retaining skilled labor, by the intensity of discussions on this issue in 10-K filings. We show that this measure effectively captures firm risk due to the mobility of skilled labor. We find that an increase from the 25th to the 75th percentile in the skilled labor risk would increase the skilled labor wage by 22% (or $15,593) and also lead to higher equity-based incentive pay. The skilled labor risk also interacts with other corporate policies such as financial leverage, cash holdings, and M&As. (JEL G30, G32, G34, H20, J20, J24, J40, J41)Received September 28, 2020; editorial decision March 12, 2021 by Editor Andrew Ellul.

Suggested Citation

  • Yue Qiu & Tracy Yue Wang, 2021. "Skilled Labor Risk and Corporate Policies [The growth of low skill service jobs and the polarization of the U.S. labor market]," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 10(3), pages 437-472.
    • Handle: RePEc:oup:rcorpf:v:10:y:2021:i:3:p:437-472.
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    2. Cook, Douglas O. & Via, M. Tony, 2023. "Organizational capital and firm risk – Testing the outside option," Finance Research Letters, Elsevier, vol. 51(C).

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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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