← Search

Review of Financial Studies Vol. 37 No. 9 2024

Human Capital Portability and Careers in Finance

Janet Gao1; Wenyu Wang2; Yufeng Wu3

1 McDonough School of Business, Georgetown University , United States · 2 Kelley School of Business, Indiana University , United States · 3 Fisher College of Business, the Ohio State University , United States

Abstract

How does firm-specific human capital shape careers in the finance industry? We build a dynamic model where workers accumulate portable and nonportable (firm-specific) human capital and learn about their match quality with employers. Estimating the model using granular data on M&A advisory bankers, we show that a large fraction of bankers’ human capital is nonportable, ranging from 12% to 46% across different firm types. Bankers make a dynamic trade-off between portability and returns on human capital, leading to time-varying job preferences over their life cycle. Our results have broad implications for careers in finance and the provision of financial services.

DOI
10.1093/rfs/hhae033
Volume
37
Issue
9
Pages
2732-2778
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite