New Paper on Statistical Discrimination

Employer Learning, Statistical Discrimination and Occupational Attainment

JOSEPH G. ALTONJI
Yale University - Economic Growth Center; National Bureau of Economic Research (NBER) 2005

Yale Working Papers on Economic Applications and Policy Discussion Paper No. 3


Abstract:
I examine the implications of employer learning and statistical discrimination for initial employment rates, wages, and occupational attainment and for wage growth and occupational change over a career using a model in which the sensitivity of productivity to worker skill is increasing in the skill requirements of the job and in which employers learn about worker skill more rapidly in high skill jobs. I show that statistical discrimination influences initial employment rates, wage levels and job type, and that employers' initial estimate of productivity influences wage growth even in an environment in which access to training is not an issue. The implication is that the market may be slow to learn that a worker is highly skilled if worker's best early job opportunity given the information available to employers is a low skill level job that reveals little about the worker's talent