Orazem, Peter; Bouillon, Marvin; Doran, B. Michael

Southern Economic Journal Vol. 71 no. 2 (October 2004): 314-333.

Long-term attachments between workers and firms are common. Numerous studies have examined worker returns to tenure, but little is known of firm returns to firm-worker matches. Yet, these attachments represent a human capital asset quasi-held by the firm which is not captured by traditional accounting measures of firm assets. Firms with large quasi-holdings of human capital will have higher measured return on assets, other things equal. Analysis of data on 250 large manufacturing firms supports the view that firms profit from long-term attachments with their workers. Consequently, unmeasured human capital assets contribute to the explanation of persistence in measured long-run excess profits across firms.