Employer Learning and the Returns to Schooling

29 Pages Posted: 25 Jun 2000

See all articles by Thomas K. Bauer

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

John P. Haisken-DeNew

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; McMaster University, Faculty of Social Sciences, Department of Economics

Date Written: April 2000

Abstract

We examine the dynamic role of education and experience as determinants of wages. It is hypothesized that an employee's education is an important signal to the employer initially. Over time, the returns to schooling should decrease with labor market experience and increase with initially unobserved ability, since the employer gradually obtains better information on the productivity of an employee. Replicating US studies using data from a large German panel data set (GSOEP), we find no evidence for the employer learning hypothesis for Germany. Differentiating blue-collar and white-collar workers and estimating quantile regressions, however, leads to the conclusion that employer learning takes place for blue-collar workers at the lower end of the wage distribution. We further show that information on the productivity of an employee is, to a large extent, private.

Keywords: Employer learning, returns to education, tenure, experience, on-the-job training

JEL Classification: J21, J24, J31

Suggested Citation

Bauer, Thomas K. and Haisken-DeNew, John P., Employer Learning and the Returns to Schooling (April 2000). Available at SSRN: https://ssrn.com/abstract=231892

Thomas K. Bauer (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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University of Bochum - Faculty of Economics ( email )

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IZA Institute of Labor Economics ( email )

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+49 228 38 94 510 (Fax)

John P. Haisken-DeNew

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

McMaster University, Faculty of Social Sciences, Department of Economics ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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