Experience and worker flows

This paper studies the role of worker learning in a labor market where workers have incomplete information about the quality of their employment match. The amount of information about the quality of a new match depends on a worker's past job experience. Allowing workers to learn from experience...

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Bibliographic Details
Published inQuantitative economics Vol. 7; no. 1; pp. 225 - 255
Main Author Gorry, Aspen
Format Journal Article
LanguageEnglish
Published New Haven, CT The Econometric Society 01.03.2016
Blackwell Publishing Ltd
John Wiley & Sons, Inc
Subjects
E24
Econometrics
Economic models
Employment
experience
J24
J31
J64
job finding probability
Labor market
Learning
wage volatility
Work experience
worker flows
Workers
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Summary:This paper studies the role of worker learning in a labor market where workers have incomplete information about the quality of their employment match. The amount of information about the quality of a new match depends on a worker's past job experience. Allowing workers to learn from experience generates a decline in job finding probabilities with age that is consistent with patterns found in the data. Moreover, workers with more past experience will on average have less wage volatility on new jobs, which is also consistent with the data. In contrast to the fact that the cross-sectional wage distribution fans out with experience, this second result implies that individual wage changes become more predictable.
ISSN:1759-7331
1759-7323
1759-7331
DOI:10.3982/QE363