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Discussion Paper Details

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Title: The Sharing Hypothesis for Specific Human Capital

Author(s): Margaret Stevens

Publication Date: December 1994

Keyword(s): Contracts, Sharing, Specific Human Capital and Tenure

Programme Area(s): Human Resources

Abstract: This paper examines the foundations of the prediction that the costs of, and returns to, an investment in specific human capital will be shared between worker and firm, and hence that in the presence of specific human capital there will be a positive relationship between wage and tenure. It is shown that the standard model does not in fact predict such a relationship. A more precise definition of sharing is suggested, and two models are described in which sharing does arise, in response to a problem of asymmetric information.

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Bibliographic Reference

Stevens, M. 1994. 'The Sharing Hypothesis for Specific Human Capital'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1124