A Test of Adverse Selection in the Market for Experienced Workers

48 Pages Posted: 11 Jul 2016

See all articles by Kevin Lang

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Russell Weinstein

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations; University of Illinois at Urbana-Champaign - Department of Economics

Date Written: July 2016

Abstract

We show that in labor market models with adverse selection, otherwise observationally equivalent workers will experience less wage growth following a period in which they change jobs than following a period in which they do not. We find little or no evidence to support this prediction. In most specifications the coefficient has the opposite sign, sometimes statistically significantly so. When consistent with the prediction, the estimated effects are small and statistically insignificant. We consistently reject large effects in the predicted direction. We argue informally that our results are also problematic for a broader class of models of competitive labor markets.

Suggested Citation

Lang, Kevin and Weinstein, Russell, A Test of Adverse Selection in the Market for Experienced Workers (July 2016). NBER Working Paper No. w22387, Available at SSRN: https://ssrn.com/abstract=2807698

Kevin Lang (Contact Author)

Boston University - Department of Economics ( email )

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Boston, MA 02215
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National Bureau of Economic Research (NBER)

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Russell Weinstein

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations ( email )

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Champaign, IL 61820-6297
United States

HOME PAGE: http://publish.illinois.edu/RussellWeinstein

University of Illinois at Urbana-Champaign - Department of Economics ( email )

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1407 W. Gregory
Urbana, IL 61801
United States

HOME PAGE: http://publish.illinois.edu/RussellWeinstein

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