Abstract
Long‐term attachments between workers and firms are common. Numerous studies have examined worker returns to tenure, but little is known of firm returns to firm‐worker matches. Yet these attachments represent a human capital asset quasi‐held by the firm, which is not captured by traditional accounting measures of firm assets. Firms with large quasi‐holdings of human capital will have higher measured return on assets, other things equal. Analysis of data on 250 large manufacturing firms supports the view that firms profit from long‐term attachments with their workers. Consequently, unmeasured human capital assets contribute to the explanation of persistence in measured long‐run excess profits across firms.
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