Business Commons^™

Investment In Human Capital And Labor Mobility: Evidence From A Shock To Property Rights, Christopher P. Clifford, William C. Gerken

Institute for the Study of Free Enterprise Working Papers

We show that the assignment of property rights to client relationships affects employee behavior in the industry for financial advice. Our identification comes from staggered firm-level entry into the Protocol for Broker Recruiting. The protocol effectively transfers the ownership of the client relationship from the firm to the employee. We document that entering into the protocol increases employee labor mobility among member firms. Further, we find that upon protocol inclusion, employees are less likely to generate customer complaints and more likely to invest in their own general human capital, but less likely to invest in firm-specific human capital. We use …