On-the-job learning and earnings

A simple model of informal learning on-the-job, which combines learning by oneself and learning from others, is proposed in this paper. It yields a closed-form solution that revises Mincer-Jovanovic's (1981) treatment of tenure in the human capital earnings function by relating earnings to the individual's learning potential from jobs and firms. We estimate the structural parameters of this non-linear model on a large French survey with matched employer-employee data. We find that workers on average can learn from others ten percent of their own human capital on entering the firm, and catch half of their learning potential in just two years. The measurement of worker's learning potential in their jobs and establishments provides a simple characterization of primary-type and secondary-type jobs and establishments. We find a strong relationship between the job-specific learning potential and tenure. Predictions of dual labor market theory regarding the positive match of primary-type firms (which offer high learning opportunities) with highly endowed workers (educated, high wages) are visible at the establishment level but seem to vanish at the job's level