The concept of a firm's human capital is reconsidered to include both the technical and the social skills of its workforce. Technical skills are defined by the ability to turn inputs into outputs, and measured by the productivity of unit labor effort. Social skills are defined by the propensity...

This paper investigates the role that idiosyncratic uncertainty plays in shaping social preferences over the degree of labor market flexibility, in a general equilibrium model of dynamic labor demand where the productivity of firms evolves over time as a Geometric Brownian motion. A key result...