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Job Market Signaling and Employer Learning

31 Pages Posted: 3 Nov 2008  

Carlos Alós-Ferrer

University of Cologne - Department of Economics

Julien Prat

University of Vienna; IZA Institute of Labor Economics

Abstract

This paper extends the job market signaling model of Spence (1973) by allowing firms to learn the ability of their employees over time. Contrary to the model without employer learning, we find that the Intuitive Criterion does not always select a unique separating equilibrium. When the Intuitive Criterion bites and information is purely asymmetric, the separating level of education does not depend on the observability of workers' types. On the other hand, when workers are also uncertain about their productivity, the separating level of education is ambiguously related to the speed of employer learning.

Keywords: employer learning, education, job markets, signaling, intuitive criterion

JEL Classification: I20, C70, D82, D83

Suggested Citation

Alós-Ferrer, Carlos and Prat, Julien, Job Market Signaling and Employer Learning. IZA Discussion Paper No. 3285. Available at SSRN: https://ssrn.com/abstract=1294516 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Carlos Alos-Ferrer (Contact Author)

University of Cologne - Department of Economics ( email )

Cologne, 50923
Germany

Julien Prat

University of Vienna ( email )

Bruenner Strasse 72
Vienna 1210, Vienna
Austria

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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