The Relation among Human Capital, Productivity and Market Value: Building Up from Micro Evidence
December 2002
Working Paper Number:
tp-2002-14
Abstract
This paper investigates and evaluates the direct and indirect contribution of human capital
to business productivity and shareholder value. The impact of human capital may occur in two ways:
the specific knowledge of workers at businesses may directly increase business
performance, or a skilled workforce may also indirectly act as a complement to improved
technologies, business models or organizational practices. We use newly created firm-level
measures of workforce human capital and productivity to examine links between those measures
and the market value of the employing firm. The new human capital measures come from an
integrated employer-employee data base under development at the US Census Bureau. We link
these data to financial information from Compustat at the firm level, which provides measures of
market value and tangible assets. The combination of these two sources permits examination of
the link between human capital, productivity, and market value. There is a substantial positive
relation between human capital and market value that is primarily related to the unmeasured
personal characteristics of the employees, which are captured by the new measures.
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:
econometric,
endogeneity,
payroll,
quarterly,
census data,
productivity growth,
growth,
earnings,
labor productivity,
productivity increases,
average,
productivity measures,
measures productivity,
accounting,
expenditure,
estimates productivity,
capital,
capital productivity,
economic census,
workforce,
wages productivity,
econometrician,
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census years,
census business,
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economic statistics
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Standard Industrial Classification,
Bureau of Labor Statistics,
National Science Foundation,
National Bureau of Economic Research,
Labor Productivity,
University of Maryland,
Federal Reserve Bank,
Financial, Insurance and Real Estate Industries,
Current Population Survey,
Longitudinal Business Database,
Employer Identification Numbers,
Cornell University,
Economic Census,
Department of Labor,
National Institute on Aging,
Alfred P Sloan Foundation,
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AKM,
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