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How acid are lemons? Adverse selection and signalling for skilled labour market entrants

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  • Wagner, Robert
  • Zwick, Thomas

Abstract

This paper jointly analyses the consequences of adverse selection and signalling 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 changersin the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. Additional training firm signals are high apprenticeship wages that signal a positive selection of apprenticeship applicants, works councils and establishment size. 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 ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-014.

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Date of creation: 2012
Date of revision:
Handle: RePEc:zbw:zewdip:12014

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

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References

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  1. Jens Mohrenweiser & Thomas Zwick, 2008. "Why do Firms Train Apprentices? The Net Cost Puzzle Reconsidered," Economics of Education Working Paper Series 0016, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Oct 2008.
  2. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 78-118, February.
  3. Acemoglu, Daron & Pischke, Jorn-Steffen, 2000. "Certification of training and training outcomes," European Economic Review, Elsevier, vol. 44(4-6), pages 917-927, May.
  4. Christian Dustmann & Uta Schönberg, 2009. "Training and Union Wages," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 363-376, May.
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  6. Harhoff, Dietmar & Kane, Thomas J, 1996. "Is the German Apprenticeship System a Panacea for the US Labour Market?," CEPR Discussion Papers 1311, C.E.P.R. Discussion Papers.
  7. Christian Pfeifer & Stefan Schneck, 2010. "Relative Wage Positions and Quit Behavior: New Evidence from Linked Employer-Employee Data," Working Paper Series in Economics 163, University of Lüneburg, Institute of Economics.
  8. 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).
  9. Eugene A. Kroch & Kriss Sjoblom, 1994. "Schooling as Human Capital or a Signal: Some Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 156-180.
  10. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
  11. Iourii Manovskii & Gueorgui Kambourov, 2004. "Occupational Specificity of Human Capital," 2004 Meeting Papers 197, Society for Economic Dynamics.
  12. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
  13. Robert Gibbons & Lawrence Katz, 1989. "Layoffs and Lemons," Working Papers 629, Princeton University, Department of Economics, Industrial Relations Section..
  14. Mohrenweiser, Jens & Zwick, Thomas & Backes-Gellner, Uschi, 2013. "Poaching and firm-sponsored training: First clean evidence," ZEW Discussion Papers 13-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-61, April.
  16. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
  17. David Soskice, 1994. "Reconciling Markets and Institutions: The German Apprenticeship System," NBER Chapters, in: Training and the Private Sector, pages 25-60 National Bureau of Economic Research, Inc.
  18. Jacobebbinghaus, Peter & Alda, Holger, 2007. "LIAB-Datenhandbuch, Version 2.0 (LIAB Data Handbook Version 2.0)," FDZ Datenreport. Documentation on Labour Market Data 200702_de, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  19. Lars Behrenz, 2001. "Who Gets The Job And Why? An Explorative Study Of Employers’ Recruitment Behavior," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 255-278, November.
  20. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December.
  21. Uta Schönberg, 2007. "Testing for Asymmetric Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 651-691.
  22. Greenwald, Bruce C & Glasspiegel, Robert R, 1983. "Adverse Selection in the Market for Slaves: New Orleans, 1830-1860," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 479-99, August.
  23. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
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Cited by:
  1. 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.
  2. 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.

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