Funded by the Seventh Framework Programme of the European Union

Paper by Bernd Görzig and Martin Gornig at the 34th IARIW General Conference

Depreciation on Organisational Capital – A Micro Level Analysis for Germany

Paper by Bernd Görzig and Martin Gornig (DIW Berlin)

To be presented to the 34rd General Conference of the International Association for Research in Income and Wealth, Dresden (Germany), August, 2016

Already in 1980, Prescott and Visscher noted that organizational capital is related to the fact that people in the production units are working as a team. Since then, a number of authors have emphasized that the team value represents a dominant part of organisational capital. If such a team value exists, it is related to the employees who form the team. This paper assumes that a loss in the team value of a production unit will occur if members of the team are leaving it. Hence, we calculate unit specific quit rates that can be taken as proxies for the depreciation rate of the team value. In the simplest model, the quit rate is calculated as number of employees leaving the unit related to the stock of employees in the unit. In more demanding models we use wage weighted quit rates.


August 21st, 2016