Three Essays on Human Capital and Labor Mobility

Abstract

This thesis consists of three essays addressing the issues of labor mobility or human capital accumulation from different aspects.

The first essay is titled as “Human Capital Accumulation and the Use of Non-compete Agreements.” This essay analyzes under what conditions it is desirable for firms to use non-compete agreements (NCAs) by analyzing a model with non-contractible and partially transferable human capital, wage bargaining, and bilateral investment from both firms and works. Elaborating on the trade-off between mitigating the firm's and worker's under-investment problem, we show that firms will use NCAs if and only if the relative importance of firm's training when building up worker's overall human capital is sufficiently high. We also analyzed an extension of our model that incorporates unknown match quality and the measurement of worker's riskiness. The result suggests that it is more desirable to use NCAs for the high risky worker, which offers implication in the recruitment practice.

The second essay is titled as “Asset Specificity, Human Capital Acquisition, and Labor Market Competition.” This essay explores a new model of labor market competition that incorporates asset specificity, acquisition of firm-specific human capital, firm size, and labor mobility. Each firm's production efficiency is determined by the level of its managerial capability, and firm-specificity of asset and human capital in the model. Elaborating on the connection between labor mobility and the levels of firms' asset specificity and their employment sizes, we show that the importance of managerial capability and firm-specificity of asset systematically influence labor mobility, asset specificity, average firm size, and employment practices. The model's empirical implications are also discussed.

The third essay is titled as “Taxation of Human Capital and Labor Income Inequality: The Role of Parental Transfer.” This essay studies how labor income and bequest taxes affect labor income inequality. The data from 19 OECD countries between 1980 and 2008 show that the labor income taxation significantly increases income inequality measured by Gini coefficient, and the inequality effect of bequest taxation is ambiguous. We construct an overlapping-generations model with heterogeneous agents---who make educational investment and bequest decision in different periods of the life cycle---that can account for these facts.