IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v69y2020icp319-333.html
   My bibliography  Save this article

Does employer learning with statistical discrimination exist in China? Evidence from Chinese Micro Survey Data

Author

Listed:
  • Wang, Jun
  • Li, Bo

Abstract

Because employers cannot perfectly recognize workers’ actual ability when recruiting, they have rational expectations for worker productivity only through considering easily observable characteristics such as education. However, with the increase in labour market experience, employers gradually learn actual productivity through historical working performance. The above phenomenon is called employer learning with statistical discrimination (EL-SD). This paper confirms that EL-SD significantly exists in the Chinese labour market based on Chinese Household Income Program (CHIP) data from 2013 and Chinese Family Panel Studies (CFPS) data from 2012 to 2014. Furthermore, EL-SD is hardly corroborated for advantaged workers such as males, college graduates, highly skilled workers, high wage earners, and workers in large businesses or the urban labour market.

Suggested Citation

  • Wang, Jun & Li, Bo, 2020. "Does employer learning with statistical discrimination exist in China? Evidence from Chinese Micro Survey Data," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 319-333.
  • Handle: RePEc:eee:reveco:v:69:y:2020:i:c:p:319-333
    DOI: 10.1016/j.iref.2020.05.021
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056020301234
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Light, Audrey, 1998. "Estimating Returns to Schooling: When Does the Career Begin?," Economics of Education Review, Elsevier, vol. 17(1), pages 31-45, February.
    2. Galindo-Rueda, Fernando, 2003. "Employer learning and schooling-related statistical discrimination in Britain," LSE Research Online Documents on Economics 19491, London School of Economics and Political Science, LSE Library.
    3. Patrick J. Bayer & Peter Arcidiacono & Aurel Hizmo, 2010. "Web Appendix: Beyond Signaling and Human Capital: Education and the Revelation of Ability," Working Papers 10-52, Duke University, Department of Economics.
    4. Pinkston, Joshua C., 2003. "Screening discrimination and the determinants of wages," Labour Economics, Elsevier, vol. 10(6), pages 643-658, December.
    5. Ge, Suqin & Yang, Dennis Tao, 2011. "Labor market developments in China: A neoclassical view," China Economic Review, Elsevier, vol. 22(4), pages 611-625.
    6. Rune V. Lesner, 2018. "Testing for Statistical Discrimination Based on Gender," LABOUR, CEIS, vol. 32(2), pages 141-181, June.
    7. Smith Freeman, 1977. "Wage Trends as Performance Displays Productive Potential: A Model and Application to Academic Early Retirement," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 419-443, Autumn.
    8. Battistin, Erich & De Nadai, Michele & Sianesi, Barbara, 2014. "Misreported schooling, multiple measures and returns to educational qualifications," Journal of Econometrics, Elsevier, vol. 181(2), pages 136-150.
    9. Eliana La Ferrara & Alberto Chong & Suzanne Duryea, 2012. "Soap Operas and Fertility: Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 1-31, October.
    10. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, September.
    11. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
    12. Hani Mansour, 2012. "Does Employer Learning Vary by Occupation?," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 415-444.
    13. Robert Gibbons & Michael Waldman, 2006. "Enriching a Theory of Wage and Promotion Dynamics inside Firms," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 59-108, January.
    14. Audrey Light & Andrew McGee, 2015. "Employer Learning and the “Importance†of Skills," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 72-107.
    15. 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.
    16. Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc.
    17. Michael Waldman, 1984. "Job Assignments, Signalling, and Efficiency," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 255-267, Summer.
    18. Zhang, Dongyang & Zhuge, Liqun & Freeman, Richard B., 2020. "Firm dynamics of hi-tech start-ups: Does innovation matter?," China Economic Review, Elsevier, vol. 59(C).
    19. Henry S. Farber & Robert Gibbons, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1007-1047.
    20. Lange, Fabian & Topel, Robert, 2006. "The Social Value of Education and Human Capital," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 8, pages 459-509, Elsevier.
    21. Eric Strobl, 2004. "Do employers use education as a signal for ability in developing countries? Evidence from Ghana," Applied Economics Letters, Taylor & Francis Journals, vol. 11(4), pages 259-261.
    22. Sarah Brown & John G. Sessions, 2004. "Signalling and Screening," Chapters, in: Geraint Johnes & Jill Johnes (ed.), International Handbook on the Economics of Education, chapter 2, Edward Elgar Publishing.
    23. John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
    24. Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-958, December.
    25. Steffen Habermalz, 2014. "Rational inattention and employer learning," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 605-626.
    26. Empar Pons & Juan Blanco, 2005. "Sheepskin Effects in the Spanish Labour Market: A Public-Private Sector Analysis," Education Economics, Taylor & Francis Journals, vol. 13(3), pages 331-347.
    27. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 313-350.
    28. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
    29. Barış Kaymak, 2014. "Postschooling Training Investment and Employer Learning," Journal of Human Capital, University of Chicago Press, vol. 8(3), pages 318-349.
    30. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    31. Bruce C. Greenwald, 1986. "Adverse Selection in the Labour Market," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 325-347.
    32. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 1-35.
    33. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
    34. 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).
    35. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-571, June.
    36. Stijn Broecke, 2015. "Experience and the returns to education and skill in OECD countries: Evidence of employer learning?," OECD Journal: Economic Studies, OECD Publishing, vol. 2015(1), pages 123-147.
    37. Dongyang Zhang & Gang Xu, 2019. "Does Government Subsidy Affect Firm Survival? Evidence from Chinese Manufacturing Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(11), pages 2628-2651, September.
    38. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
    39. Eric A. Hanushek & Lei Zhang, 2006. "Quality-Consistent Estimates of International Returns to Skill," NBER Working Papers 12664, National Bureau of Economic Research, Inc.
    40. Belman, Dale & Heywood, John S, 1991. "Sheepskin Effects in the Returns to Education: An Examination on Women and Minorities," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 720-724, November.
    41. Light, Audrey & McGee, Andrew, 2015. "Does employer learning vary by schooling attainment? The answer depends on how career start dates are defined," Labour Economics, Elsevier, vol. 32(C), pages 57-66.
    42. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    43. Thomas J. Kane & Cecilia Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," Working Papers 798, Princeton University, Department of Economics, Industrial Relations Section..
    44. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
    45. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    46. Steffen Habermalz, 2006. "More Detail on the Pattern of Returns to Educational Signals," Southern Economic Journal, Southern Economic Association, vol. 73(1), pages 125-135, July.
    47. Joanne Salop & Steven Salop, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 619-627.
    48. Rubinstein, Yona & Weiss, Yoram, 2006. "Post Schooling Wage Growth: Investment, Search and Learning," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 1, pages 1-67, Elsevier.
    49. Glenn Hoetker, 2007. "The use of logit and probit models in strategic management research: Critical issues," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 331-343, April.
    50. Joanne Salop & Steven C. Salop, 1976. "Self-selection and turnover in the labor market," Special Studies Papers 80, Board of Governors of the Federal Reserve System (U.S.).
    51. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Audrey Light & Andrew McGee, 2015. "Employer Learning and the “Importance†of Skills," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 72-107.
    2. Audrey Light & Andrew McGee, 2011. "Employer Learning and the “Importance” of Skills," Working Papers 11-02, Ohio State University, Department of Economics.
    3. Waldman, Michael, 2016. "The dual avenues of labor market signaling," Labour Economics, Elsevier, vol. 41(C), pages 120-134.
    4. 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 30597, University Library of Munich, Germany.
    5. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    6. Lepage, Louis Pierre, 2020. "Endogenous learning and the persistence of employer biases in the labor market," CLEF Working Paper Series 24, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    7. NAKABAYASHI, Masaki, 2011. "Acquired Skills and Learned Abilities: Wage Dynamics of Blue-collar Workers in Internal Labor Markets," ISS Discussion Paper Series (series F) f153, Institute of Social Science, The University of Tokyo, revised Apr 2012.
    8. 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.
    9. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 91-147.
    10. Light, Audrey & McGee, Andrew, 2015. "Does employer learning vary by schooling attainment? The answer depends on how career start dates are defined," Labour Economics, Elsevier, vol. 32(C), pages 57-66.
    11. Braga, Breno, 2018. "Earnings dynamics: The role of education throughout a worker’s career," Labour Economics, Elsevier, vol. 52(C), pages 83-97.
    12. 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).
    13. Gaurab Aryal & Manudeep Bhuller & Fabian Lange, 2019. "Signaling and Employer Learning with Instruments," NBER Working Papers 25885, National Bureau of Economic Research, Inc.
    14. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    15. Bok Hoon & Daniel Parent, 2013. "Learning and the Form of Compensation," Journal of Labor Research, Springer, vol. 34(1), pages 79-98, March.
    16. Piopiunik, Marc & Schwerdt, Guido & Simon, Lisa & Woessmann, Ludger, 2020. "Skills, signals, and employability: An experimental investigation," European Economic Review, Elsevier, vol. 123(C).
    17. Barbara Mueller & Stefan Wolter, 2014. "The role of hard-to-obtain information on ability for the school-to-work transition," Empirical Economics, Springer, vol. 46(4), pages 1447-1471, June.
    18. Araki, Shota & Kawaguchi, Daiji & Onozuka, Yuki, 2016. "University prestige, performance evaluation, and promotion: Estimating the employer learning model using personnel datasets," Labour Economics, Elsevier, vol. 41(C), pages 135-148.
    19. Inmaculada García-Mainar & Víctor M. Montuenga-Gómez, 2017. "Subjective educational mismatch and signalling in Spain," Documentos de Trabajo dt2017-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    20. Hani Mansour, 2012. "Does Employer Learning Vary by Occupation?," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 415-444.

    More about this item

    Keywords

    Statistical discrimination; Employer learning; Signalling; Education;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:69:y:2020:i:c:p:319-333. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.