Horizontal Transfer and Promotion: New Evidence and an Interpretation from the Perspective of Task-Specific Human Capital

This paper provides new evidence about horizontal transfer and promotion using the largest available personnel panel data in Japan and interprets them from the perspective of task-specific human capital. We find that firms synchronize their employees’ promotion and horizontal transfers. Then, we show theoretically that task-specific human capital can naturally generate such synchronization. We also find that the directors in an accounting department have the highest probability of being promoted to become board members, while those in a research department have the lowest. This suggests that top managers need a balanced skill set, in which allocative skill is relatively important.