Investment in Human Capital and Labor Mobility: Evidence from a Shock to Property Rights

Christopher P. Clifford and William C. Gerken

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.

Published: January, 2019

Read the Full Document