Heterogeneity in the Labor Market: Ability and Information Acquisition

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....

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Bibliographic Details
Published in:Eastern economic journal 2017-06, Vol.43 (3), p.377-390
Main Author: Polachek, Solomon W.
Format: Article
Language:English
Subjects:
Discount rates
Economic models
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Employees
Human capital
Labor market
Presidential Address
Skills
Wages & salaries
Workers
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Summary: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.
ISSN:0094-5056
1939-4632
DOI:10.1057/s41302-017-0096-z