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How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants

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  • Robert Wagner

    ()
    (Ludwig-Maximilians University, Munich)

  • Thomas Zwick

    ()
    (Ludwig-Maximilians University, Munich and Centre for European Economic Research, Mannheim)

Abstract

This paper for the first time jointly analyses the consequences of adverse selection, signalling and indices on entry wages of skilled employees. It uses German linked employer employee panel data (LIAB) and introduces a measure for relative productivity of skilled job applicants based on apprenticeship wages. It shows that post-apprenticeship employer changers are a negative selection from the training firms’ point of view. Negative selection leads to lower average wages of employer changers in the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. High apprenticeship wages signal a positive selection of apprenticeship applicants. Works councils and establishment size seem to be indices for good training quality. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.

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Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0071.

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Length: 41 pages
Date of creation: Jan 2012
Date of revision: Feb 2012
Handle: RePEc:iso:educat:0071

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Keywords: entry wages; employer change; adverse selection; signalling;

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  1. Harhoff, Dietmar & Kane, Thomas J., 1995. "Is the German apprenticeship system a panacea for the US labour market?," ZEW Discussion Papers 95-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  8. Jens Mohrenweiser & Thomas Zwick & Uschi Backes-Gellner, 2010. "Poaching And Firm Sponsored Training: First Clean Evidence," Economics of Education Working Paper Series 0051, University of Zurich, Institute for Strategy and Business Economics (ISU), revised May 2013.
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Cited by:
  1. Jens Mohrenweiser, 2012. "Recruitment and Apprenticeship Training," Economics of Education Working Paper Series 0073, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Aug 2013.
  2. Jens Mohrenweiser & Thomas Zwick & Uschi Backes-Gellner, 2010. "Poaching And Firm Sponsored Training: First Clean Evidence," Economics of Education Working Paper Series 0051, University of Zurich, Institute for Strategy and Business Economics (ISU), revised May 2013.

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