Market-Specific Human Capital : Talent Mobility and Compensation

We analyze how the top firms and managers from one market (industry or country) would compete with those from another, to develop an integrated market for talent. In our competitive matching model, in two distinct markets talent has general and market-specific human capital (GHC and M-SHC) components. Desegregating the markets, due to M-SHC any particular manager is ranked differently by firms from different markets, so positive assortative matching is not applicable. We solve for the integrated matching equilibrium; talent 'migration' (cross-market hiring), value-creation, and compensation are endogenously determined. We also identify conditions where i) migration at all talent-ranks is increasing then decreasing in market-wide M-SHC; and ii) managers hired-away at increased wages create less value in their new role than they did before