Employer learning, job changes, and wage dynamics

Abstract

This paper takes a new approach to testing whether employer learning is public or private. We show that public and private learning schemes make two distinct predictions about the curvature of the wage growth path when a worker changes jobs, because less information about the worker's productivity is transferred to a new employer in the private learning case than in the public learning case. This prediction enables us to account for individual and job-match heterogeneity, which was not possible in previous tests. Using the National Longitudinal Survey of Youth 1979, we find that employer learning is public for high-school graduates and private for college graduates.