Heterogeneity in the Labor Market: Ability and Information Acquisition

14 Pages Posted: 24 Apr 2018

See all articles by Solomon W. Polachek

Solomon W. Polachek

State University of New York at Binghamton; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: April 2017

Abstract

This paper relates five previously unobserved individual attributes (namely, three measures of ability based on the lifecycle human capital model, a rate of time preference, and a skill depreciation rate) to estimates of worker and firm incomplete labor market information for 1539 NLS-Y respondents. First, it finds more able employees obtain more information (or bargain better) about wages than their less able counterparts, whereas firms obtain relatively more information (or bargain better) when dealing with low ability workers. Second, it finds that workers whose skills depreciate more quickly possess less wage information (or bargain more poorly) than workers whose skills depreciate less quickly. Similarly, it finds employees with a greater time discount rates have less wage information (or bargain more poorly) than those employees with lower discount rates.

Keywords: heterogeneity, incomplete information, ability

Suggested Citation

Polachek, Solomon W., Heterogeneity in the Labor Market: Ability and Information Acquisition (April 2017). Eastern Economic Journal, Vol. 43, Issue 3, 2017, Available at SSRN: https://ssrn.com/abstract=3162070 or http://dx.doi.org/10.1057/s41302-017-0096-z

Solomon W. Polachek (Contact Author)

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IZA Institute of Labor Economics ( email )

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