[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/15265.html
   My bibliography  Save this paper

Cognitive Ability and Employee Mobility: Evidence from Swedish Microdata

Author

Listed:
  • Kretschmer, Tobias
  • Khashabi, Pooyan
  • Mohammadi, Ali
  • Raffiee, Joseph
Abstract
Cognitive ability and intelligence have been highlighted as the primary personnel measures used for hiring decisions, and gurus and popular business outlets consistently recommend that managers hire people smarter than themselves. However, the sustainability of such hiring strategies with respect to employee retention has not been fully investigated, largely due to data constraints. In this research note, we examine the relationship between cognitive ability and employee mobility, taking advantage of unique microdata from Sweden. Our empirical results show that higher cognitive ability is negatively associated with turnover, implying that cognitively-gifted employees settle with better employment options internally, compared to the external labor market. Nevertheless, when the employee has a significantly higher cognitive ability than their manager , employees are more likely to the firm. The results shed light on the relationship between cognitive ability and mobility, and highlight the role of managers for the success of hiring strategies based on cognitive ability.

Suggested Citation

  • Kretschmer, Tobias & Khashabi, Pooyan & Mohammadi, Ali & Raffiee, Joseph, 2020. "Cognitive Ability and Employee Mobility: Evidence from Swedish Microdata," CEPR Discussion Papers 15265, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15265
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP15265
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Aleksandra Kacperczyk & Chanchal Balachandran, 2018. "Vertical and Horizontal Wage Dispersion and Mobility Outcomes: Evidence from the Swedish Microdata," Organization Science, INFORMS, vol. 29(1), pages 17-38, February.
    2. Baghai, Ramin & Silva, Rui & Vig, Vikrant & Thell, Viktor, 2020. "Talent in Distressed Firms: Investigating the Labor Costs of Financial Distress," CEPR Discussion Papers 14383, C.E.P.R. Discussion Papers.
    3. Nick Bloom & Tobias Kretschmer & John Van Reenen, 2011. "Are family-friendly workplace practices a valuable firm resource?," Strategic Management Journal, Wiley Blackwell, vol. 32(4), pages 343-367, April.
    4. Edward P. Lazear & Kathryn L. Shaw & Christopher T. Stanton, 2015. "The Value of Bosses," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 823-861.
    5. Erik Lindqvist & Roine Vestman, 2011. "The Labor Market Returns to Cognitive and Noncognitive Ability: Evidence from the Swedish Enlistment," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 101-128, January.
    6. Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self‐Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, May.
    7. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    8. Heejung Byun & Joseph Raffiee & Martin Ganco, 2019. "Discontinuities in the Value of Relational Capital: The Effects on Employee Entrepreneurship and Mobility," Organization Science, INFORMS, vol. 30(6), pages 1368-1393, November.
    9. Benjamin A. Campbell & Martin Ganco & April M. Franco & Rajshree Agarwal, 2012. "Who leaves, where to, and why worry? employee mobility, entrepreneurship and effects on source firm performance," Strategic Management Journal, Wiley Blackwell, vol. 33(1), pages 65-87, January.
    10. Stéphane Bonhomme & Thibaut Lamadon & Elena Manresa, 2019. "A Distributional Framework for Matched Employer Employee Data," Econometrica, Econometric Society, vol. 87(3), pages 699-739, May.
    11. Mitchell Hoffman & Steven Tadelis, 2021. "People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 243-285.
    12. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5.
    13. Cristian L. Dezsö & David Gaddis Ross, 2012. "Does female representation in top management improve firm performance? A panel data investigation," Strategic Management Journal, Wiley Blackwell, vol. 33(9), pages 1072-1089, September.
    14. Luis Garicano & Yanhui Wu, 2012. "Knowledge, Communication, and Organizational Capabilities," Organization Science, INFORMS, vol. 23(5), pages 1382-1397, October.
    15. Rajshree Agarwal & Martin Ganco & Rosemarie H. Ziedonis, 2009. "Reputations for toughness in patent enforcement: implications for knowledge spillovers via inventor mobility," Strategic Management Journal, Wiley Blackwell, vol. 30(13), pages 1349-1374, December.
    16. Robert M. Woodbury, 1917. "General Intelligence and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 31(4), pages 690-704.
    17. Evan Starr & Martin Ganco & Benjamin A. Campbell, 2018. "Strategic human capital management in the context of cross‐industry and within‐industry mobility frictions," Strategic Management Journal, Wiley Blackwell, vol. 39(8), pages 2226-2254, August.
    18. Adams, Renée & Keloharju, Matti & Knüpfer, Samuli, 2018. "Are CEOs born leaders? Lessons from traits of a million individuals," Journal of Financial Economics, Elsevier, vol. 130(2), pages 392-408.
    19. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heejung Byun & Joseph Raffiee & Martin Ganco, 2019. "Discontinuities in the Value of Relational Capital: The Effects on Employee Entrepreneurship and Mobility," Organization Science, INFORMS, vol. 30(6), pages 1368-1393, November.
    2. Simeth, Markus & Mohammadi, Ali, 2017. "The impact of open innovation on employee mobility and entrepreneurship," Working Paper Series in Economics and Institutions of Innovation 449, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. Emma Lappi & Johan E. Eklund & Johan Klaesson, 2022. "Does education matter for the earnings of former entrepreneurs? Longitudinal evidence using entry and exit dynamics," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 827-865, July.
    4. Francesco Castellaneta & Raffaele Conti & Aleksandra Kacperczyk, 2020. "The (Un) intended consequences of institutions lowering barriers to entrepreneurship: The impact on female workers," Strategic Management Journal, Wiley Blackwell, vol. 41(7), pages 1274-1304, July.
    5. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    6. Martin Ganco & Cameron D. Miller & Puay Khoon Toh, 2020. "From litigation to innovation: Firms' ability to litigate and technological diversification through human capital," Strategic Management Journal, Wiley Blackwell, vol. 41(13), pages 2436-2473, December.
    7. Benedikt Gerst & Christian Grund, 2023. "Gender-Specific Duration of Parental Leave and Current Earnings," Work, Employment & Society, British Sociological Association, vol. 37(1), pages 215-235, February.
    8. Jose Maria Millan & Emilio Congregado & Concepcion Roman & Mirjam van Praag & Andre van Stel, 2011. "The Value of an Educated Population for an Individual's Entrepreneurship Success," Tinbergen Institute Discussion Papers 11-066/3, Tinbergen Institute, revised 06 May 2014.
    9. Henry Sauermann, 2017. "Fire in the Belly? Employee Motives and Innovative Performance in Startups versus Established Firms," NBER Working Papers 23099, National Bureau of Economic Research, Inc.
    10. Timothy Gubler, 2019. "Connected, but Qualified? Social Affiliations, Human Capital, and Service Professional Performance," Organization Science, INFORMS, vol. 30(5), pages 912-936, September.
    11. Federica De Stefano & Matthew Bidwell & Arnaldo Camuffo, 2022. "Do managers capture the value they create? Drivers of managers' value capture in a large retail chain," Strategic Management Journal, Wiley Blackwell, vol. 43(10), pages 1983-2011, October.
    12. Chila, Vilma, 2021. "Knowledge dynamics in employee entrepreneurship : Implications for parents and offspring," Other publications TiSEM a1f5d18c-783b-4af6-8414-6, Tilburg University, School of Economics and Management.
    13. Vera Rocha & Mirjam van Praag, 2020. "Mind the gap: The role of gender in entrepreneurial career choice and social influence by founders," Strategic Management Journal, Wiley Blackwell, vol. 41(5), pages 841-866, May.
    14. Ekinci, Emre, 2022. "Employee entrepreneurship and signaling role of corporate venturing decisions," Labour Economics, Elsevier, vol. 79(C).
    15. Simeth, Markus & Mohammadi, Ali, 2022. "Losing talent by partnering up? The impact of R&D collaboration on employee mobility," Research Policy, Elsevier, vol. 51(7).
    16. Boeker, Warren & Howard, Michael D. & Basu, Sandip & Sahaym, Arvin, 2021. "Interpersonal relationships, digital technologies, and innovation in entrepreneurial ventures," Journal of Business Research, Elsevier, vol. 125(C), pages 495-507.
    17. Gnekpe, Christian & Jimenez, Alfredo, 2023. "Smoke signal: When firms' patent strategy and local patent protection system affect equity stakes in cross-border acquisitions," Journal of International Management, Elsevier, vol. 29(6).
    18. Joaquin Turmo-Garuz & M.-Teresa Bartual-Figueras & Francisco-Javier Sierra-Martinez, 2019. "Factors Associated with Overeducation Among Recent Graduates During Labour Market Integration: The Case of Catalonia (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1273-1301, August.
    19. Richard J. Murnane & John B. Willett & Kathryn Parker Boudett, 1999. "Do Male Dropouts Benefit from Obtaining a GED, Postsecondary Education, and Training?," Evaluation Review, , vol. 23(5), pages 475-503, October.
    20. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.

    More about this item

    Keywords

    Cognitive ability; Employee mobility; Cognitive distance; Managers; Retention;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:15265. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.