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A Model of Asymmetric Employer Learning With Testable Implications

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Author Info

  • Joshua C. Pinkston

    ()
    (U.S. Bureau of Labor Statistics)

Abstract

This paper develops and tests a unique model of asymmetric employer learning. The model relaxes the informational assumptions used in most of the previous literature and assumes firms compete for workers through bidding wars. As a result, outside firms can profitably compete for an employed worker who is equally productive in any firm, despite the current employer’s informational advantage. The model in this paper is the first in the literature to predict either wage growth without changes in publicly observed information (e.g., promotions) or mobility between firms without firm- or match-specific productivity. The bidding through which firms compete for a worker produces a sequence of wages that converges to the current employer’s conditional expectation of the worker’s productivity. This convergence of wages allows the model to be tested using an extension of previous work on employer learning. Wage regressions estimated on a sample of men from the NLSY produce evidence consistent with the model’s predictions.

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Bibliographic Info

Paper provided by U.S. Bureau of Labor Statistics in its series Working Papers with number 390.

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Length: 51 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:bls:wpaper:ec060020

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Related research

Keywords: Asymmetric Employer Learning; Wage and Performance Relationship; Applications of Auction Theory;

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References

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  1. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
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Citations

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Cited by:
  1. Theodore Koutmeridis, 2013. "The Market for "Rough Diamonds": Information, Finance and Wage Inequality," Discussion Paper Series, Department of Economics 201307, Department of Economics, University of St. Andrews, revised 14 Oct 2013.
  2. Kahn, Lisa B., 2013. "Asymmetric Information between Employers," IZA Discussion Papers 7147, Institute for the Study of Labor (IZA).
  3. Néria Rodréguez-Planas, 2011. "Displacement, Signaling, and Recall Expectations," Working Papers 550, Barcelona Graduate School of Economics.
  4. Nicholas Economides & Katja Seim & V. Brian Viard, 2007. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 07-28, New York University, Leonard N. Stern School of Business, Department of Economics.
  5. Nakabayashi, Masaki, 2011. "Schooling, employer learning, and internal labor market effect: Wage dynamics and human capital investment in the Japanese steel industry, 1930-1960s," MPRA Paper 30597, University Library of Munich, Germany.
  6. DeVaro, Jed & Waldman, Michael, 2006. "The signaling role of promotions: Further theory and empirical evidence," MPRA Paper 1550, University Library of Munich, Germany.
  7. Theodore Papageorgiou, 2009. "Learning Your Comparative Advantages," 2009 Meeting Papers 1150, Society for Economic Dynamics.
  8. Ján Zábojník, 2012. "Promotion tournaments in market equilibrium," Economic Theory, Springer, vol. 51(1), pages 213-240, September.
  9. Theodore Koutmeridis, 2013. "The Market for "Rough Diamonds": Information, Finance and Wage Inequality," CDMA Working Paper Series 201307, Centre for Dynamic Macroeconomic Analysis, revised 14 Oct 2013.
  10. Kriechel, Ben & Mühlemann, Samuel & Pfeifer, Harald & Schuette, Miriam, 2012. "Works Councils, Collective Bargaining and Apprenticeship Training," IZA Discussion Papers 6497, Institute for the Study of Labor (IZA).
  11. Bognanno, Michael L. & Melero Martín, Eduardo, 2012. "Promotion Signals, Age and Education," IZA Discussion Papers 6431, Institute for the Study of Labor (IZA).
  12. Hensvik, Lena & Nordström Skans, Oskar, 2013. "Social networks, employee selection and labor market outcomes," Working Paper Series 2013:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  13. Light, Audrey & McGee, Andrew, 2012. "Employer Learning and the "Importance" of Skills," IZA Discussion Papers 6623, Institute for the Study of Labor (IZA).
  14. Seik Kim & Emiko Usui, 2012. "Employer Learning, Job Changes, and Wage Dynamics," Working Papers UWEC-2012-01, University of Washington, Department of Economics.
  15. Valerie Smeets & Michael Waldman & Frederic Warzynski, 2013. "Performance, Career Dynamics, and Span of Control," Economics Working Papers 2013-02, School of Economics and Management, University of Aarhus.
  16. NAKABAYASHI, Masaki, 2011. "Career Experiences Replaced: Emergence of Japanese Internal Labor Markets," ISS Discussion Paper Series (series F) f157, Institute of Social Science, The University of Tokyo, revised 21 Jan 2014.
  17. Arvidsson, Sara, 2011. "Predictors of customer loyalty in automobile insurance - The role of private information in risky driving behavior and claim history," Working papers in Transport Economics 2011:2, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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