Human Capital in Context: What Employment Survival Reveals About Worker-Firm Match

Jung Ho Choi, Mario Milone

There is no best worker in general, only a best worker for a particular firm. We develop a measure of worker-firm match quality that treats fit as a property of the pair, learned from the survival of employment relationships. A two-tower neural network embeds workers, from their career histories and current positions, and firms, from their characteristics and business descriptions, into a common space, and match quality is the cosine similarity of the two vectors. The measure takes its functional form from the skill-weights model of firm-specific human capital, and its only estimated objective, a separation hazard, from the view of the job match as an experience good. Estimated on more than a billion person-periods covering 101 million workers and 8.4 million firms, a 0.1 increase in match quality lowers the odds of separation by 48%. About a quarter of the variance of match quality is specific to the worker-firm pair, which worker-, firm-, and occupation-level measures set to zero by construction. Workers earn more when better matched, especially early in a relationship, and firms whose workforces score higher grow faster, become more profitable, and are issued more, and more…