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How acid are lemons? Adverse selection and signalling for skilled labour market entrants

  • Wagner, Robert
  • Zwick, Thomas

This paper jointly analyses the consequences of adverse selection and signalling on entry wages of skilled employees. It uses German linked employer employee panel data (LIAB) and introduces a measure for relative productivity of skilled job applicants based on apprenticeship wages. It shows that post-apprenticeship employer changers are a negative selection from the training firms' point of view. Negative selection leads to lower average wages of employer changersin the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. Additional training firm signals are high apprenticeship wages that signal a positive selection of apprenticeship applicants, works councils and establishment size. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-014.

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Date of creation: 2012
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Handle: RePEc:zbw:zewdip:12014
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  7. Kriechel, Ben & Mühlemann, Samuel & Pfeifer, Harald & Schuette, Miriam, 2012. "Works Councils, Collective Bargaining and Apprenticeship Training," IZA Discussion Papers 6497, Institute for the Study of Labor (IZA).
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