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Experimentation and Job Choice

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Abstract

In most models in which firms and workers learn about worker productivity through repeated observations of on-the-job performance, the amount of information revealed about workers is exogenously given and constant across jobs. In this paper, we examine what happens when the amount of information gathered about workers can be altered by assigning workers to different jobs. We show that informational differences across jobs naturally give rise to experimentation. That is, there is a trade off between current period output in order assign workers to jobs that reveal a substantial amount of information workers’ skills. We find that while experimentation is the most valuable when workers are young and inexperienced, the optimal level of experimentation is initially very small, rises as workers gain experience and then eventually declines. As a result, our model suggests that wage growth may be driven partly by a decline in experimentation as workers age. We also show that random productivity shocks can have long-lasting and, in some cases, permanent effects on both wages and wage growth.

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  • Kate Antonovics & Limor Golan, "undated". "Experimentation and Job Choice," GSIA Working Papers 2006-E41, Carnegie Mellon University, Tepper School of Business.
  • Handle: RePEc:cmu:gsiawp:-1768369455
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    Cited by:

    1. Carl Sanders, 2012. "Skill Uncertainty, Skill Accumulation, and Occupational Choice," 2012 Meeting Papers 633, Society for Economic Dynamics.
    2. 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.
    3. Konon, Alexander & Kritikos, Alexander S., 2017. "Media and Occupational Choice," IZA Discussion Papers 11015, Institute for the Study of Labor (IZA).
    4. Christopher Blattman & Stefan Dercon, 2016. "Occupational Choice in Early Industrializing Societies: Experimental Evidence on the Income and Health Effects of Industrial and Entrepreneurial Work," Working Papers id:11361, eSocialSciences.
    5. Josh Kinsler & Ronni Pavan, 2016. "Parental Beliefs and Investment in Children: The Distortionary Impact of Schools," Working Papers 2016-029, Human Capital and Economic Opportunity Working Group.
    6. Peter Arcidiacono & V. Joseph Hotz & Arnaud Maurel & Teresa Romano, 2014. "Recovering Ex Ante Returns and Preferences for Occupations using Subjective Expectations Data," NBER Working Papers 20626, National Bureau of Economic Research, Inc.
    7. Guvenen, Fatih & Kuruscu, Burhanettin & Tanaka, Satoshi & Wiczer, David, 2015. "Multidimensional Skill Mismatch," Working Papers 2015-22, Federal Reserve Bank of St. Louis.
    8. Argaw, Bethlehem A. & Maier, Michael F. & Skriabikova, Olga J., 2017. "Risk attitudes, job mobility and subsequent wage growth during the early career," ZEW Discussion Papers 17-023, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Stefanie Brilon, 2010. "Job Assignment with Multivariate Skills," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_25, Max Planck Institute for Research on Collective Goods.
    10. Gorry, Aspen & Devon, Gorry & Trachter, Nicholas, 2014. "Learning and Life Cycle Patterns of Occupational Transitions," Working Paper 14-15, Federal Reserve Bank of Richmond.
    11. repec:eee:jetheo:v:174:y:2018:i:c:p:184-223 is not listed on IDEAS
    12. Canidio, Andrea & Legros, Patrick, 2016. "The Value of Entrepreneurial Failures: Task Allocation and Career Concerns," CEPR Discussion Papers 11295, C.E.P.R. Discussion Papers.
    13. Konon, Alexander, 2016. "Career choice under uncertainty," Annual Conference 2016 (Augsburg): Demographic Change 145583, Verein für Socialpolitik / German Economic Association.
    14. Jonathan James, 2012. "Learning and occupational sorting," Working Paper 1225, Federal Reserve Bank of Cleveland.
    15. Pedros Silos & Eric Smith, 2015. "Human Capital Portfolios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 635-652, July.
    16. German Cubas & Pedro Silos, 2017. "Career Choice and the Risk Premium in the Labor Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 1-18, October.
    17. In Chang Hwang, 2016. "Active learning and optimal climate policy," EcoMod2016 9611, EcoMod.
    18. Pedros Silos & Eric Smith, 2015. "Human Capital Portfolios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 635-652, July.
    19. Jonathan James, 2011. "Ability matching and occupational choice," Working Paper 1125, Federal Reserve Bank of Cleveland.
    20. Hani Mansour, 2012. "Does Employer Learning Vary by Occupation?," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 415-444.
    21. Brilon, Stefanie, 2015. "Job assignment with multivariate skills and the Peter Principle," Labour Economics, Elsevier, vol. 32(C), pages 112-121.
    22. Carl Sanders & Christopher Taber, 2012. "Life-Cycle Wage Growth and Heterogeneous Human Capital," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 399-425, July.
    23. Tyler Ransom & Esteban Aucejo & Arnaud Maurel & Peter Arcidiacono, 2014. "College Attrition and the Dynamics of Information Revelation," 2014 Meeting Papers 529, Society for Economic Dynamics.
    24. Maier, Michael & Argaw, Bethlehem A. & Maier, Michael F. & Skriabikova, Olga J., 2016. "Risk attitudes, job mobility and subsequent wage growth during the early career," Annual Conference 2016 (Augsburg): Demographic Change 145677, Verein für Socialpolitik / German Economic Association.

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