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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}},
  keywords     = {{Human capital; occupational choice; sorting; new firms; J24; J60; M13}},
  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}},
}