Increasingly, attention is being focused on the usefulness of manpower information systems in the firm. The demand for this information emanates from three distinct levels. Level I: Manpower Information for Legal Compliance Decisions. The primary focus here is in developing information systems which provide necessary data for governmental units such as the Department of Health, Education, and Welfare, the Equal Employment Opportunity Commission, the Social Security Administration, and similar organizations which monitor employment practices, collect taxes, or engage in policy-making activities. Level 1I: Manpower Information as an Input to Manpower Planning. In this area, the objective is to provide management with data to be used in making numerous decisions regarding the allocation and pricing of human resources including recruitment, training, utilization, and termination. Level III: Manpower Information as an Input to the Valuation of "Human Assets" for External Reporting. Here, the objective is to provide independent information in the basic financial reports regarding heretofore unreported human assets possessed by the entity. While the accounting literature on human resources has dealt with all three levels of manpower information systems (e.g., see Picur [1973] and Flamholtz [1974]), most authors have given only cursory attention to the basic economic foundation underlying the existence of "unrecorded human assets." Our purpose in this paper is to explore the economic and accounting assumptions underlying this literature and to develop criteria for the employee training conditions under which such assets might exist. In the economic literature, there already exists a reasonably well de-

On the Existence of Unrecorded Human Assets: An Economic Perspective

On the Existence of Unrecorded Human Assets: An Economic Prespective

This paper analyzes the allocation of the costs of labor displacement from the viewpoints of economic efficiency and social justice. Commencing with a model assuming perfect knowledge of expected employment change-that of seasonal variations in employment-it examines the effect of this knowledge on an industry's expected labor supply price. Then, using a more realistic model of unpredictable employment changes, it considers the compensation for unexpected layoffs that is necessary for efficient resource allocation. Both models are modified by the restrictions of pure seniority systems to explore further the effects of these and other forms of seniority preference on layoff probability, unemployment compensation, and mobility preference. The major conclusion of the analysis is that, under specified conditions, workers permanently laid off should be compensated by their employers for the equity they have accumulated. The paper concludes with some observations on implications of the analysis for severance pay.

Vladimir Stoikov

Papers

The Allocation of the Cost of Displaced Labor and Severance Pay.