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

40 Pages Posted: 6 Mar 2012

See all articles by Robert Wagner

Robert Wagner

affiliation not provided to SSRN

Thomas Zwick

University of Würzburg - Business Administration & Economics; Centre for European Economic Research (ZEW); Maastricht University - Research Centre for Education and the Labour Market (ROA)

Date Written: 2012

Abstract

This paper jointly analyses the consequences of adverse selection and signalling 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 changersin the first skilled job in comparison to stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. Additional training firm signals are high apprenticeship wages that signal a positive selection of apprenticeship applicants, works councils and establishment size. 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

JEL Classification: J24, J31, J62, J63, M52, M53

Suggested Citation

Wagner, Robert and Zwick, Thomas, How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-014. Available at SSRN: https://ssrn.com/abstract=2014673 or http://dx.doi.org/10.2139/ssrn.2014673

Robert Wagner

affiliation not provided to SSRN ( email )

Thomas Zwick (Contact Author)

University of Würzburg - Business Administration & Economics ( email )

Sanderring 2
Wuerzburg, D-97070
Germany

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Maastricht University - Research Centre for Education and the Labour Market (ROA) ( email )

P.O. Box 616
Maastricht, MD6200
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
85
Abstract Views
681
rank
290,237
PlumX Metrics