Employer Learning and the “Importance” of Skills
AbstractWe ask whether the role of employer learning in the wage-setting process depends on skill type and skill importance to productivity. Combining data from the NLSY79 with O*NET data, we use Armed Services Vocational Aptitude Battery scores to measure seven distinct types of pre-market skills that employers cannot readily observe, and O*NET importance scores to measure the importance of each skill for the worker’s current three-digit occupation. Before bringing importance measures into the analysis, we find evidence of employer learning for each skill type, for college and high school graduates, and for blue and white collar workers. Moreover, we find that the extent of employer learning—which we demonstrate to be directly identified by magnitudes of parameter estimates after simple manipulation of the data—does not vary significantly across skill type or worker type. Once we allow parameters identifying employer learning and screening to vary by skill importance, we find evidence of distinct tradeoffs between learning and screening, and considerable heterogeneity across skill type and skill importance. For some skills, increased importance leads to more screening and less learning; for others, the opposite is true. Our evidence points to heterogeneity in the degree of employer learning that is masked by disaggregation based on schooling attainment or broad occupational categories.
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Bibliographic InfoPaper provided by Ohio State University, Department of Economics in its series Working Papers with number 11-02.
Length: 36 pages
Date of creation: Oct 2011
Date of revision:
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dynamic discrete choice; latent state variables; serial correlation; sequential Monte Carlo methods; particle filtering;
Other versions of this item:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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.:
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NBER Working Papers
13951, National Bureau of Economic Research, Inc.
- Peter Arcidiacono & Patrick Bayer & Aurel Hizmo, 2010. "Beyond Signaling and Human Capital: Education and the Revelation of Ability," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 76-104, October.
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- Hani Mansour, 2010.
"Does Employer Learning Vary by Occupation?,"
Discussion Papers of DIW Berlin
1015, DIW Berlin, German Institute for Economic Research.
- Joshua C. Pinkston, 2009. "A Model of Asymmetric Employer Learning with Testable Implications," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 367-394.
- Flores-Lagunes, Alfonso & Light, Audrey, 2009.
"Interpreting Degree Effects in the Returns to Education,"
IZA Discussion Papers
4169, Institute for the Study of Labor (IZA).
- Alfonso Flores-Lagunes & Audrey Light, 2010. "Interpreting Degree Effects in the Returns to Education," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
- Joshua C. Pinkston, 2006. "A Model of Asymmetric Employer Learning With Testable Implications," Working Papers 390, U.S. Bureau of Labor Statistics.
- repec:bla:restud:v:76:y:2009:i:1:p:367-394 is not listed on IDEAS
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