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How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants

Author

Listed:
  • Robert Wagner

    () (Ludwig-Maximilians University, Munich)

  • Thomas Zwick

    () (Ludwig-Maximilians University, Munich and Centre for European Economic Research, Mannheim)

Abstract

This paper for the first time jointly analyses the consequences of adverse selection, signalling and indices 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 changers in the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. High apprenticeship wages signal a positive selection of apprenticeship applicants. Works councils and establishment size seem to be indices for good training quality. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.

Suggested Citation

  • Robert Wagner & Thomas Zwick, 2012. "How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants," Economics of Education Working Paper Series 0071, University of Zurich, Department of Business Administration (IBW), revised Feb 2012.
  • Handle: RePEc:iso:educat:0071
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Mohrenweiser, Jens, 2016. "Recruitment and apprenticeship training," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 23(1), pages 6-24.
    2. Mohrenweiser, Jens & Wydra-Sommaggio, Gaby & Zwick, Thomas, 2014. "Adverse Selection and Information Advantages of Training Firms," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100525, Verein für Socialpolitik / German Economic Association.
    3. Daniel Dietz & Thomas Zwick, 2016. "The retention effect of training – portability, visibility, and credibility," Economics of Education Working Paper Series 0113, University of Zurich, Department of Business Administration (IBW).
    4. 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.
    5. Hans Dietrich & Harald Pfeifer & Felix Wenzelmann, 2016. "The more they spend, the more I earn? Firms’ training investments and post-training wages of apprentices," Economics of Education Working Paper Series 0116, University of Zurich, Department of Business Administration (IBW).
    6. Fuchs, William & Green, Brett & Papanikolaou, Dimitris, 2016. "Adverse selection, slow-moving capital, and misallocation," Journal of Financial Economics, Elsevier, vol. 120(2), pages 286-308.
    7. Mohrenweiser, Jens & Wydra-Sommaggio, Gaby & Zwick, Thomas, 2015. "Work-related ability as source of information advantages of training employers," ZEW Discussion Papers 15-057, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Jens Mohrenweiser & Gabriele Wydra-Somaggio & Thomas Zwick, 2017. "Information Advantages of Training Employers Despite Credible Training Certificates," Economics of Education Working Paper Series 0121, University of Zurich, Department of Business Administration (IBW), revised Apr 2017.

    More about this item

    Keywords

    entry wages; employer change; adverse selection; signalling;

    JEL classification:

    • 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
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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