Specific Capital and Technological Variety

29 Pages Posted: 16 May 2008 Last revised: 2 Apr 2021

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Peter L. Rousseau

Vanderbilt University - Department of Economics

Date Written: May 2008

Abstract

Growth of technological variety offers more scope for the division of labor. And when a division of labor requires some specific training, the technological specificity of human capital grows and, with it, probably the firm specificity of that capital. We build a simple model that captures this observation. The model implies that a rising specialization of human and physical capital raises the rents in the average match between a firm and its human and physical capital. We document that in the last 40 years the firm's share of those rents has also grown, and we use the model to explain why this shift may have taken place.

Suggested Citation

Jovanovic, Boyan and Rousseau, Peter L., Specific Capital and Technological Variety (May 2008). NBER Working Paper No. w13998, Available at SSRN: https://ssrn.com/abstract=1133912

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

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New York, NY 10012
United States

Peter L. Rousseau

Vanderbilt University - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
615-343-2466 (Phone)
615-343-8495 (Fax)

HOME PAGE: http://www.vanderbilt.edu/econ/faculty/rousseau.html

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