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Acquired Skills and Learned Abilities: Wage Dynamics of Blue-collar Workers in Internal Labor Markets

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Workers' abilities are hidden information. Thus, when hiring, firms first use education as a proxy for abilities, and then learn about workers' abilities by tracking products. If this learning is asymmetric inside and outside major firms' internal labor markets, the market expects work experience and schooling to be complements for experience before workers gain long-term employment, which hides the learning effect. Once workers gain longterm employment, the learning effect becomes evident. Furthermore, the employer learns more quickly in the early stages of internal career, and this privately learned information could improve the efficiency of in-house training programs.

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File URL: http://www.iss.u-tokyo.ac.jp/publishments/dpf/pdf/f-153.pdf
File Function: Revised version, April 2014
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Paper provided by Institute of Social Science, The University of Tokyo in its series ISS Discussion Paper Series (series F) with number f153.

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Length: 28 pages
Date of creation: Feb 2011
Date of revision: 30 Jan 2015
Handle: RePEc:itk:issdps:f153
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