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Employer Learning and the Returns to Schooling

Author

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  • Bauer, Thomas K.

    (RWI)

  • Haisken-DeNew, John P.

    (Melbourne Institute of Applied Economic and Social Research)

Abstract

We examine the dynamic role of education and experience as determinants of wages. It is hypothesized that an employee’s education is an important signal to the employer initially. Over time, the returns to schooling should decrease with labor market experience and increase with initially unobserved ability, since the employer gradually obtains better information on the productivity of an employee. Replicating US studies using data from a large German panel data set (GSOEP), we find no evidence for the employer learning hypothesis for Germany. Differentiating blue-collar and white-collar workers and estimating quantile regressions, however, leads to the conclusion that employer learning takes place for blue-collar workers at the lower end of the wage distribution. We further show, that information on the productivity of an employee is to a large extend private.

Suggested Citation

  • Bauer, Thomas K. & Haisken-DeNew, John P., 2000. "Employer Learning and the Returns to Schooling," IZA Discussion Papers 146, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp146
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    More about this item

    Keywords

    on-the-job training; Employer learning; experience; returns to education; tenure;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • 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

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