Cracker Barrel on Regulating Responsibility

Business and the Environment

Human Capital and Specificity in Industrial Clusters. Implications for worker behavior?

In “Human Capital Specificity: Evidence from the Dictionary of Occupational Titles and Displaced Worker Surveys, 1984 – 2000,” Poletaev and Robinson (2008) ask, “What kinds of involuntary job switches can take place without major losses of specific human capital” (390)?

Poletaev and Robinson attempt to measure the wages lost by workers who switch industries and/or skills due to exogenous displacement.  They determine that workers can avoid extreme wage loss by seeking a job that requires a similar skill-set and is in the same industry as their previous job.  Workers who switched industry experienced higher percentages of lost wages.  Poletaev and Robinson also note a difference between what they call “fluid” and “crystallized” skills.  Fluid skills are highly transferrable and crystallized skills are those one gets better at over time through learning and repletion and are likely specific to a certain job only.

Importantly, Poletaev and Robinson consider two outcomes of job displacement and skill usage, “First, different types of skills may be the main ones used on the new job compared to the old job, losing the specific capital in the old skills.  Second, the new job may have a skill portfolio with proportions similar to that of the old job, but use less of the skills, and hence underutilize some of the specific capital in the old skills” (416-417).  Industry clusters may have the potential to create a pocket of industry specific work skills making it easier to transfer between jobs and skill-sets making Poletaev and Robinson’s analysis applicable to these situations.

What are the implications of this theory about skill transfer and human capital building in developing country manufacturing sectors?  Does the introduction of corporate social responsibility concerns into supply chain management cause workers to anticipate exogenous displacement through plant closures and weak buyer-supplier relationships leading to “cutting and running” at the first sign of poor labor conditions?  Has this anticipation had an effect on how workers view themselves in the workplace?  What are the implications for skill transfer within industries in that case?

In the event of involuntary job loss, how are workers sorted by potential employers after plant closures?  What does this evidence suggest about how a worker should behave while at work?

Reference: Poletaev, Maxim and Chris Robinson.  2008.  “Human Capital Specificity: Evidence from the Dictionary of Occupational Titles and Displaced Worker Surveys, 1984 – 2000.” Journal of Labor Economics. Vol. 26. No. 3. Pp. 387-420.

 

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