Employer Learning and Schooling-Related Statistical Discrimination in Britain
34 Pages Posted: 6 Jun 2003
Date Written: May 2003
Abstract
This paper develops and tests a new model of asymmetric information in the labour market involving employer learning. In the model, I provide theoretical conditions for the identification - based on the experience and tenure profiles of estimated returns to ability and education - of employer learning about unobserved worker's productivity and statistical discrimination based on years of schooling. Using data from two British birth cohorts, estimates based on this model support the hypothesis that British employers have limited information about their workers, make inferences based on their education levels, and progressively learn about their true ability. Moreover, this learning process - particularly among blue-collar workers - favours incumbent employers relative to potential competitors (asymmetric learning). This informational advantage implies an additional distortion in the functioning of the labour market and policy evaluation rarely takes into account the informational impact of interventions and its implications for individual behaviour.
Keywords: Employer Learning, Statistical Discrimination, Asymmetric Information, Unobserved Ability
JEL Classification: C51, C52, D82, J39, J79
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Employer Learning, Statistical Discrimination and Occupational Attainment
-
By Henry S. Farber and Robert S. Gibbons
-
Comparative Advantage, Learning, and Sectoral Wage Determination
By Robert S. Gibbons, Lawrence F. Katz, ...
-
Testing Theories of Discrimination: Evidence from "Weakest Link"
-
Dispersion in the Economic Return to Schooling
By Colm P. Harmon, Vincent Hogan, ...
-
Does Education Raise Productivity or Just Reflect it?
By Arnaud Chevalier, Colm P. Harmon, ...
