Returns to Tenure; Conceptual and Empirical Issues

Becker's (1962) seminal article on human capital drew attention to the two polar types of human capital, which he called general and specific. In this paper we consider an intermediate type of human capital which we call quasi-specific. In particular, we consider environments in which the value placed on human capital by alternative employers is high for some firms and low for others, and job search is relevant. Our analysis demonstrates that, in the presence of quasi-specific human capital, empirical estimates of returns to tenure will typically understate the specificity of the human capital in the environment. The relevance of quasi-specific human capital to Sicherman and Galor's theory of career mobility is also discussed.