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

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Abstract

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.

Suggested Citation

  • 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.
  • Handle: RePEc:itk:issdps:f153
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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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    Cited by:

    1. ZHANGALIYEVA, Aigerim & NAKABAYASHI, Masaki, 2013. "Legacy of Czar: The Russian Dual System of Schooling and Signaling," ISS Discussion Paper Series (series F) f163, Institute of Social Science, The University of Tokyo, revised 16 Feb 2018.

    More about this item

    Keywords

    asymmetric employer learning; cross-sectional skill distribution; longitudinal employer learning; internal labor markets.;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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