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How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants

Robert Wagner and Thomas Zwick ()

No 71, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: This paper for the first time jointly analyses the consequences of adverse selection, signalling and indices on entry wages of skilled employees. It uses German linked employer employee panel data (LIAB) and introduces a measure for relative productivity of skilled job applicants based on apprenticeship wages. It shows that post-apprenticeship employer changers are a negative selection from the training firms’ point of view. Negative selection leads to lower average wages of employer changers in the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. High apprenticeship wages signal a positive selection of apprenticeship applicants. Works councils and establishment size seem to be indices for good training quality. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.

Keywords: entry wages; employer change; adverse selection; signalling (search for similar items in EconPapers)
JEL-codes: J24 J31 J62 J63 M52 M53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm, nep-lab and nep-lma
Date: 2012-01, Revised 2012-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

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http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0071_lhwpaper.pdf (application/pdf)

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Working Paper: How acid are lemons? Adverse selection and signalling for skilled labour market entrants (2012) Downloads
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