Learning and Wage Dynamics

Henry S. Farber and Robert Gibbons

The Quarterly Journal of Economics, 1996, vol. 111, issue 4, 1007-1047

Abstract: We develop a dynamic model of learning about worker ability in a competitive labor market. The model produces three testable implications regarding wage dynamics: (1) 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; (2) timeinvariant variables correlated with ability but unobserved by employers ( such as certain test scores) are increasingly correlated with wages as experience increases; and (3) wage residuals are a martingale. We present evidence from the NLSY that is broadly consistent with the model's predictions.

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (416)

Downloads: (external link)
http://hdl.handle.net/10.2307/2946706 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Learning and Wage Dynamics* (1994)
Working Paper: Learning and Wage Dynamics (1991)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:111:y:1996:i:4:p:1007-1047.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().