Negative Supply Shock and Labor Mobility

Author: Kimiko Terai
Date: 2022/8/4
No: DP2022-012
JEL Classification codes: J24,J26,J32
Language: Japanese
[ Abstract / Highlights ]

〇Firms obtain monopsony power by inducing employees to invest in firm-specific human capital. 〇By committing to seniority-based wage system, the firm can make employees to make high effort in accumulating firm-specific human capital. 〇The seniority-based wage system reduces labor mobility, which would harm the firm when the firm faces a negative supply shock. 〇With enhanced portability of corporate pensions and the reform in taxation on retirement benefits, labor mobility can be resumed, which profits the firm and increases production.