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Sorting on Unobserved Skills into New Firms

Knutsson, Polina LU (2018) In Working Papers
Abstract
Human capital features prominently in theoretical work on post-entry performance of new firms. Empirical analysis has, however, to a large extent overlooked the unobserved component of human capital focusing on years of education or labor market experience. This paper adds to the literature on worker characteristics and post-entry firm performance by putting the unobserved quality of workers in the center of analysis. I find strong evidence that new firms on average employ workers of lower unobserved quality relative to incumbent firms. Among new firms workers of higher unobserved quality are overrepresented in spin-offs and incorporated new firms. I further show that unobserved quality of workers is important for the post-entry... (More)
Human capital features prominently in theoretical work on post-entry performance of new firms. Empirical analysis has, however, to a large extent overlooked the unobserved component of human capital focusing on years of education or labor market experience. This paper adds to the literature on worker characteristics and post-entry firm performance by putting the unobserved quality of workers in the center of analysis. I find strong evidence that new firms on average employ workers of lower unobserved quality relative to incumbent firms. Among new firms workers of higher unobserved quality are overrepresented in spin-offs and incorporated new firms. I further show that unobserved quality of workers is important for the post-entry performance of firms as it is a strong predictor of new firm survival. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
keywords
Human capital, occupational choice, sorting, new firms, J24, J60, M13
in
Working Papers
issue
2018:38
pages
35 pages
language
English
LU publication?
yes
id
b261c50e-243d-45de-aa21-cf040216e7b4
alternative location
https://swopec.hhs.se/lunewp/abs/lunewp2018_038.htm
date added to LUP
2018-12-11 10:50:56
date last changed
2018-12-11 10:50:56
@misc{b261c50e-243d-45de-aa21-cf040216e7b4,
  abstract     = {Human capital features prominently in theoretical work on post-entry performance of new firms. Empirical analysis has, however, to a large extent overlooked the unobserved component of human capital focusing on years of education or labor market experience. This paper adds to the literature on worker characteristics and post-entry firm performance by putting the unobserved quality of workers in the center of analysis. I find strong evidence that new firms on average employ workers of lower unobserved quality relative to incumbent firms. Among new firms workers of higher unobserved quality are overrepresented in spin-offs and incorporated new firms. I further show that unobserved quality of workers is important for the post-entry performance of firms as it is a strong predictor of new firm survival.},
  author       = {Knutsson, Polina},
  language     = {eng},
  note         = {Working Paper},
  number       = {2018:38},
  series       = {Working Papers},
  title        = {Sorting on Unobserved Skills into New Firms},
  url          = {https://swopec.hhs.se/lunewp/abs/lunewp2018_038.htm},
  year         = {2018},
}