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Economic policy uncertainty and company's human capital

Iuliia Naidenova (International Laboratory of Intangible-driven Economy, HSE University, Perm, Russian Federation)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 5 July 2021

Issue publication date: 4 July 2022




The research aims to examine the impact of economic policy uncertainty (EPU) on a company's behaviour concerning its human capital. Additionally, the difference in effect for companies with specific human capital is analysed.


The hypotheses are tested on a multi-industry sample of large public companies from five European countries, using panel data modelling. The index of Baker et al. (2016) is used to measure EPU.


In the case of increasing EPU on one standard deviation, companies tend to reduce their human capital by approximately 1.7%. Moreover, despite theoretical assumptions, the effect on companies with more specific human capital is twice stronger. The heterogeneity of effect across countries and industries is also present.

Practical implications

Regulators and governments should consciously introduce changes in relation to regulations and decrease the uncertainty of economic policy to stimulate corporate investments in human capital.


This is the first study that considers the mechanism of EPU and its influence on corporate human capital. The results suggest that concerns regarding economic policy cause companies to reduce human capital.



Funding: This study comprises research findings from the Project No. 18-18-00270 supported by the Russian Science Foundation.


Naidenova, I. (2022), "Economic policy uncertainty and company's human capital", Journal of Economic Studies, Vol. 49 No. 5, pp. 902-919.



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