Imperfect Information, On-the-Job Training, and the Employer Size-Wage Puzzle: Theory and Evidence

Shuaizhang Feng and Bingyong Zheng ()

No 4998, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper develops a two-period labor market model with imperfect information and on-the-job training, and uses data from National Longitudinal Survey of Youth 1979 Cohorts (NLSY79) to test its predictions. We find that training does not explain the positive relationship between employer size and wage. In addition, for industries that display size-wage premium, workers in large establishments are more likely to receive on-the-job training but their return to training is smaller. Our theory, substantiated by the new empirical evidence, suggests that it is not large firms, per se, but firms that hire better workers who are paying a wage premium.

Keywords: imperfect information; sorting; on-the-job training; size-wage premium (search for similar items in EconPapers)
JEL-codes: D83 J31 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2010-06
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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