View Research by Author - John Abowd

Citation URL: http://www.urban.org/JohnAbowd

This paper discusses the critical need, in social sciences, for the development of a database infrastructure that captures the complex interactions among households and businesses at the micro level and characterizes the dynamics of the modern economy. The creation of such an infrastructure has posed a major challenge to national statistical institutes. Since most institutes collect, store, and disseminate data on the engines of economic growth--businesses and households--in twin data silos, proposals to integrate the two face technical, monetary, legal, and policy obstacles that go far beyond the norm of data collection activities. Recent efforts at the Longitudinal Employer-Household Dynamics (LEHD) Program at the U.S. Census Bureau have finally made this critical data infrastructure achievable and accessible.

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.

This paper examines within- and between-firm changes in human capital, technology, and productivity using a new comprehensive data source.

Return to list of authors