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Specific Information, General Information, and Employment Matches Under Uncertainty

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  • W. Kip Viscusi

Abstract

Employment matches under uncertainty are typically accompanied by opportunities for information acquisition. Workers can acquire specific information about productivity lotteries at the firm or general information affecting their probabilistic beliefs about work elsewhere. Enterprises can acquire specific information concerning the productivity of a particular worker or general information about different groups of workers in a production process. In all cases, the market equilibrium with flexible wages is efficient. Moreover, there is no opportunity for strategic behavior that would alter this result. Both forms of information are associated with rising earnings profiles over time, hut the steepness is greater in the general case. The negative turnover-wage relation is attributable in part to the lower match termination rate of workers with productive lob histories, who earn higher wages than their less productive counterparts. General information is associated with more termination of employment matches by employers and employees than is specific information. The implications of specific/general information for matching processes in many respects aralle1 the role of that distinction in human capital theory, strengthening the link between matching theories and earlier human capital analyses.

Suggested Citation

  • W. Kip Viscusi, 1979. "Specific Information, General Information, and Employment Matches Under Uncertainty," NBER Working Papers 0394, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0394
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    1. Dale T. Mortensen, 1982. "The Matching Process as a Noncooperative Bargaining Game," NBER Chapters,in: The Economics of Information and Uncertainty, pages 233-258 National Bureau of Economic Research, Inc.
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    3. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-1143, Nov.-Dec..
    4. Melvin W. Reder, 1962. "Wage Differentials: Theory and Measurement," NBER Chapters,in: Aspects of Labor Economics, pages 257-317 National Bureau of Economic Research, Inc.
    5. Lazear, Edward P, 1976. "Age, Experience, and Wage Growth," American Economic Review, American Economic Association, vol. 66(4), pages 548-558, September.
    6. Gary S. Becker, 1974. "A Theory of Marriage," NBER Chapters,in: Economics of the Family: Marriage, Children, and Human Capital, pages 299-351 National Bureau of Economic Research, Inc.
    7. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
    8. W. Kip Viscusi, 1980. "A Theory of Job Shopping: A Bayesian Perspective," The Quarterly Journal of Economics, Oxford University Press, vol. 94(3), pages 609-614.
    9. Pencavel, John H, 1972. "Wages, Specific Training, and Labor Turnover in US Manufacturing Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 53-64, February.
    10. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-1260, December.
    11. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
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