Employer Learning and Schooling-Related Statistical Discrimination in Britain
AbstractThis paper develops and tests a new model of asymmetric information in the labour market involving employer learning. In the model, I provide theoretical conditions for the identification â based on the experience and tenure profiles of estimated returns to ability and education â of employer learning about unobserved workerâs productivity and statistical discrimination based on years of schooling. Using data from two British birth cohorts, estimates based on this model support the hypothesis that British employers have limited information about their workers, make inferences based on their education levels, and progressively learn about their true ability. Moreover, this learning process â particularly among blue-collar workersâ favours incumbent employers relative to potential competitors (asymmetric learning). This informational advantage implies an additional distortion in the functioning of the labour market and policy evaluation rarely takes into account the informational impact of interventions and its implications for individual behaviour.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0031.
Date of creation: May 2003
Date of revision:
Contact details of provider:
Web page: http://cee.lse.ac.uk/publications.htm
Other versions of this item:
- Galindo-Rueda, Fernando, 2003. "Employer Learning and Schooling-Related Statistical Discrimination in Britain," IZA Discussion Papers 778, Institute for the Study of Labor (IZA).
- Galindo-Rueda, Fernando, 2003. "Employer Learning and Schooling-Related Statistical Discrimination in Britain," Royal Economic Society Annual Conference 2003 82, Royal Economic Society.
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
- J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bauer, Thomas K. & Haisken-DeNew, John P., 2000.
"Employer Learning and the Returns to Schooling,"
IZA Discussion Papers
146, Institute for the Study of Labor (IZA).
- Henry S. Farber & Robert Gibbons, 1994.
"Learning and Wage Dynamics,"
707, Princeton University, Department of Economics, Industrial Relations Section..
- Joseph G. Altonji & Charles R. Pierret, 1997.
"Employer Learning and Statistical Discrimination,"
NBER Working Papers
6279, National Bureau of Economic Research, Inc.
- Joseph G. Altonji & Charles R. Pierret, . "Employer Learning and Statistical Discrimination," IPR working papers 97-18, Institute for Policy Resarch at Northwestern University.
- Joseph G. Altonji & Charles R. Pierret, 1997. "Employer learning and statistical discrimination," Working Paper Series, Macroeconomic Issues WP-97-11, Federal Reserve Bank of Chicago.
- Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
- Andrew Jenkins, 2001. "Companies use of psychometric testing and the changing demand for skills: A review of the literature," CEE Discussion Papers 0012, Centre for the Economics of Education, LSE.
- Cawley, John & Heckman, James & Vytlacil, Edward, 2001. "Three observations on wages and measured cognitive ability," Labour Economics, Elsevier, vol. 8(4), pages 419-442, September.
- Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
- Layard, Richard & Psacharopoulos, George, 1974. "The Screening Hypothesis and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 985-98, Sept./Oct.
- Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S227-52, October.
- 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.
- Fabian Lange, 2005. "The Returns to Schooling and Ability During the Early Career: Evidence on Employer Learning and Post-School Investment," 2005 Meeting Papers 253, Society for Economic Dynamics.
- Koerselman, Kristian, 2011. "Bias from the use of mean-based methods on test scores," Working Paper Series 1/2011, Swedish Institute for Social Research.
- Barbara Mueller & Stefan C. Wolter, 2011.
"The consequences of being different – Statistical discrimination and the school-to-work transition,"
Economics of Education Working Paper Series
0053, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Barbara Mueller & Stefan C. Wolter, 2011. "The Consequences of Being Different - Statistical Discrimination and the School-to-Work Transition," CESifo Working Paper Series 3345, CESifo Group Munich.
- Mueller, Barbara & Wolter, Stefan C., 2011. "The Consequences of Being Different: Statistical Discrimination and the School-to-Work Transition," IZA Discussion Papers 5474, Institute for the Study of Labor (IZA).
- 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.
- Yuki, Kazuhiro, 2009. "Education, Signaling, and Wage Inequality in a Dynamic Economy," MPRA Paper 16982, University Library of Munich, Germany.
- NAKABAYASHI, Masaki, 2011. "Acquired Skills and Learned Abilities: Wage Dynamics in Internal Labor Markets," ISS Discussion Paper Series (series F) f153, Institute of Social Science, The University of Tokyo, revised 07 Feb 2014.
- Nakabayashi, Masaki, 2011.
"Schooling, employer learning, and internal labor market effect: Wage dynamics and human capital investment in the Japanese steel industry, 1930-1960s,"
30597, University Library of Munich, Germany.
- 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 30749, University Library of Munich, Germany, revised 06 May 2011.
- Néria Rodréguez-Planas, 2011. "Displacement, Signaling, and Recall Expectations," Working Papers 550, Barcelona Graduate School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.