Measuring the Specificity of Human Capital: a Skill-based Approach

In this article a skill-based measure for human capital specificity will be constructed. This measure is based on the possibilities of making use of skills on labour market and it depends on the number of jobs where the particular skill is required. It is assumed that the specificity of human capital depends on the specificity of skills. In order to calculate the levels of specificity of different skills empirically, the data from the skill requirements of vacant jobs are used. The validity of this measure is tested by using it as an estimator of the probability that on-the-job training is offered to employees. The differences in the specificity of required human capital between different industries and occupations are also investigated in this paper. The proposed job specificity measure can be used for planning the public sector support to on-the-job training as the companiesí decisions to pay for training depend on the specificity of required human capital.