Learning and Wage Dynamics

Henry S. Farber and Robert Gibbons

No 3764, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

Date: 1991-07
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Quarterly Journal of Economics. Volume 111, issue 4, 1996 pp.1007-1047.

Downloads: (external link)
http://www.nber.org/papers/w3764.pdf (application/pdf)

Related works:
Journal Article: Learning and Wage Dynamics (1996)
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:nbr:nberwo:3764

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w3764

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().