Asymmetric Information between Employers

Lisa Kahn

American Economic Journal: Applied Economics, 2013, vol. 5, issue 4, 165-205

Abstract: This study explores whether potential employers have the same information about worker ability as the incumbent firm. I develop a model of asymmetric learning that nests the symmetric learning case and allows the degree of asymmetry to vary. I then show how predictions in the model can be tested with compensation data. Using the NLSY, I test the model and find strong support for asymmetric information. My estimates imply that in one period, outside firms reduce the average expectation error over worker ability by only a third of the reduction made by incumbent firms.

JEL-codes: D82 J24 J31 M12 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/app.5.4.165
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Citations: View citations in EconPapers (66)

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