American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Asymmetric Information between Employers
American Economic Journal: Applied Economics
vol. 5,
no. 4, October 2013
(pp. 165–205)
Abstract
This study explores whether potential employers have the same information about worker ability as the incumbent firm. I develop a model of asymmetric learning that nests the symmetric learning case and allows the degree of asymmetry to vary. I then show how predictions in the model can be tested with compensation data. Using the NLSY, I test the model and find strong support for asymmetric information. My estimates imply that in one period, outside firms reduce the average expectation error over worker ability by only a third of the reduction made by incumbent firms.Citation
Kahn, Lisa B. 2013. "Asymmetric Information between Employers." American Economic Journal: Applied Economics, 5 (4): 165–205. DOI: 10.1257/app.5.4.165Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- M12 Personnel Management; Executives; Executive Compensation
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