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A Model of Asymmetric
Employer Learning
with Testable Implications*
Abstract:
�����This paper helps close the gap between
theory and empirical evidence in the literature on asymmetric employer learning.� If an employer's private learning is
reflected in a worker's wage and one employer's private information is
transmitted to the next when the worker makes a job-to-job transition, then asymmetric
employer learning will appear in wage regressions as learning over an
employment spell.� Extending previous
work that assumes all learning takes place publicly, this paper develops wage
regressions that test for both asymmetric employer learning and public learning.� The empirical results, including tests of alternative
explanations, are consistent with asymmetric employer learning�s having at
least as much of an effect on wages during an employment spell as does public
learning.� The model developed in this
paper illustrates how the story suggested by the empirical work might
unfold.� It shows that outside firms can
profitably compete with a better-informed employer through bidding wars, even
when the worker is equally productive in all firms.� Furthermore, this competition results in
different wages for workers with the same publicly observable characteristics,
a result that previous models of asymmetric learning have not produced.
JEL:� J3, M5, D82, D83, D44
Keywords:� Asymmetric
Employer Learning, Wage and Performance Relationship, Applications of Auction
Theory
*I would like to thank Joseph Altonji, Andrew Cohen, Todd Elder, Harley Frazis, Mark Loewenstein, Dale Mortensen, Uta Schoenberg, Jim Spletzer, Jay Stewart, Christopher Taber, Michael Waldman, Charles Zheng, and seminar participants at the Bureau of Labor Statistics, the Census Bureau, and the Federal Reserve Board.� All mistakes and opinions are my own.
Mailing address: Bureau of Labor Statistics,