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Employer Learning and the Returns to Schooling

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Author Info
Bauer, Thomas K. () (University of Bonn, CEPR, London and IZA, Bonn)
Haisken-DeNew, John P. (German Institute for Economic Research (DIW), Berlin and IZA, Bonn)

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Abstract

We examine the dynamic role of education and experience as determinants of wages. It is hypothesized that an employee's education is an important signal to the employer initially. Over time, the returns to schooling should decrease with labor market experience and increase with initially unobserved ability, since the employer gradually obtains better information on the productivity of an employee. Replicating US studies using data from a large German panel data set (GSOEP), we find no evidence for the employer learning hypothesis for Germany. Differentiating blue-collar and white-collar workers and estimating quantile regressions, however, leads to the conclusion that employer learning takes place for blue-collar workers at the lower end of the wage distribution. We further show, that information on the productivity of an employee is to a large extend private.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 146.

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Length: 35 pages
Date of creation: Apr 2000
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Handle: RePEc:iza:izadps:dp146

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Related research
Keywords: Employer learning; returns to education; tenure; experience; on-the-job training;

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Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
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.:
  1. Gibbons, R. & Katz, L.F., 1989. "Layoffs And Lemons," Working papers 531, Massachusetts Institute of Technology (MIT), Department of Economics.
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  2. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January. [Downloadable!] (restricted)
  3. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185. [Downloadable!] (restricted)
  4. Denise J. Doiron, 1995. "Lay-Offs as Signals: The Canadian Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 899-913, November.
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  5. Weiss, Andrew, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-54, Fall. [Downloadable!] (restricted)
  6. Greenhalgh, Christine & Stewart, Mark, 1987. "The Effects and Determinants of Training," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(2), pages 171-90, May.
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Cited by:
(explanations, 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.)

  1. Galindo-Rueda, Fernando, 2003. "Employer Learning and Schooling-Related Statistical Discrimination in Britain," IZA Discussion Papers 778, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Pham, Hung T & Reilly, Barry, 2007. "The Gender Pay Gap In Vietnam, 1993-2002: A Quantile Regression Approach," MPRA Paper 6475, University Library of Munich, Germany. [Downloadable!]
  3. Hans J. Baumgartner, 2004. "Are There Any Class Size Effects on Early Career Earnings in West Germany?," Discussion Papers of DIW Berlin 417, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  4. Stephanie Lluis, . "The Role of Comparative Advantage and Learning in Wage Dynamics and Intra-Firm Mobility: Evidence from Germany," Working Papers 0103, Industrial Relations Center, University of Minnesota (Twin Cities Campus). [Downloadable!]
    Other versions:
  5. Thomas Bauer & John P. Haisken-DeNew & Patrick J. Dross, 2003. "Sheepskin Effects in Japan," RWI Discussion Papers 0005, Rheinisch-Westfälisches Institut für Wirtschaftsforschung. [Downloadable!]
    Other versions:
  6. G. Arabsheibani & Francisco Carneiro & Andrew Henley, 2006. "Changes in human capital and earnings inequality: Recent evidence from Brazil 1," The Journal of Development Studies, Taylor and Francis Journals, vol. 42(5), pages 837-867, July. [Downloadable!] (restricted)
  7. Eric Strobl, 2004. "Do employers use education as a signal for ability in developing countries? Evidence from Ghana," Applied Economics Letters, Taylor and Francis Journals, vol. 11(4), pages 259-261, March. [Downloadable!] (restricted)
  8. Strobl, Eric, 2003. "Is Education Used as a Signaling Device for Productivity in Developing Countries? Evidence from Ghana," IZA Discussion Papers 683, Institute for the Study of Labor (IZA). [Downloadable!]
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