Choosing Workers' Qualifications: No Experience Necessary?

Tracy Lewis and David Sappington

International Economic Review, 1993, vol. 34, issue 3, 479-502

Abstract: We examine an employer's preferences regarding the education, prior experience, or training of the worker she hires. Although a worker's education may be observable, his productivity on the job is often privately observed. Higher levels of education increase the chances that the worker will have high productivity on the job. The employer's preferences are shown to depend critically on the nature of the adverse selection problem she faces: high levels of education are favored for workers with idiosyncratic skills, while low levels of education are preferred for versatile workers, whose skills are transferable. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1993
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