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Human Capital Portability and Careers in Finance

Author

Listed:
  • Janet Gao
  • Wenyu Wang
  • Yufeng Wu

Abstract

How does firm-specific human capital shape careers in the finance industry? We build a dynamic model where workers accumulate portable and nonportable (firm-specific) human capital and learn about their match quality with employers. Estimating the model using granular data on M&A advisory bankers, we show that a large fraction of bankers’ human capital is nonportable, ranging from 12% to 46% across different firm types. Bankers make a dynamic trade-off between portability and returns on human capital, leading to time-varying job preferences over their life cycle. Our results have broad implications for careers in finance and the provision of financial services.

Suggested Citation

  • Janet Gao & Wenyu Wang & Yufeng Wu, 2024. "Human Capital Portability and Careers in Finance," The Review of Financial Studies, Society for Financial Studies, vol. 37(9), pages 2732-2778.
    • Handle: RePEc:oup:rfinst:v:37:y:2024:i:9:p:2732-2778.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhae033
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    More about this item

    Keywords

    J20; J24; J44; J63; G24; G34;
    All these keywords.

    JEL classification:

    • 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
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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