Learning and Wage Dynamics / Henry S. Farber, Robert Gibbons.

Format:

Book

Author/Creator:

Farber, Henry S.

Contributor:

National Bureau of Economic Research.

Gibbons, Robert.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3764.

NBER working paper series no. w3764

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

We develop a dynamic model of learning and wage determination: education may convey initial information about ability, but subsequent performance observations also are informative. Although the role of schooling in the labor market's inference process declines as performance observations accumulate, the estimated effect of schooling on the level of wages is independent of labor-market experience. In addition: time-invariant variables correlated with ability but unobserved by employers are increasingly correlated with wages as experience increases; wage residuals are a martingale; and wage cuts -are not rare, even for workers who do not change jobs. We present evidence from the National Longitudinal Survey of Youth that is generally consistent with all four of the model's predictions. We conclude that a blend of the learning model with an on-the-job-training model is more plausible than either model alone.

Notes:

Print version record

July 1991.