Educational Choice, Initial Wage and Wage Growth
In: Tinbergen Institute Discussion Paper 2020-030/III
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In: Tinbergen Institute Discussion Paper 2020-030/III
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Working paper
In: The Flow Analysis of Labour Markets; Routledge Studies in the Modern World Economy
In: Scottish journal of political economy: the journal of the Scottish Economic Society, Band 61, Heft 3, S. 229-260
ISSN: 1467-9485
AbstractFirms hiring new graduates face uncertainty on the future productivity of workers. Theory suggests that starting wages reflect this, with lower pay for greater uncertainty. We use the dispersion of exam grades within a field of education as an indicator of the unobserved heterogeneity that employers face. We find solid evidence that starting wages are lower if the variance of exam grades is higher and higher if the skew is higher: employers shift the cost of productivity risk to new hires, but pay for the opportunity to catch a really good worker. Estimating the extent of risk cost sharing between firm and worker shows that shifting to workers is larger in the market sector than in the public sector and diminishes with experience.
In: The economic journal: the journal of the Royal Economic Society, Band 114, Heft 495, S. 466-486
ISSN: 1468-0297
In: IZA Discussion Paper No. 5531
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In: Kyklos: international review for social sciences, Band 75, Heft 3, S. 410-435
ISSN: 1467-6435
AbstractWe analyze 11 years of admission decisions to a highly selective post‐graduate visual arts program. Our unique, longitudinal data includes detailed information about the selection procedures as well as the later artistic and economic achievements for both accepted and rejected applicants (n = 8,557). Regarding the predictive value of the selection procedures on later performance, our analyses show that the largest gain made is in the first, more cursory, pre‐selection round. We find that weeding out less promising applicants is easier than identifying later top‐performers, in terms of ex‐ante expectations. The subsequent or final selection round is resource intensive and consists of several interviews with multiple jury members. Here we uncover an implicit structure of criterion variables that helps explain the ex‐post admission decisions. Our simulations show that actual selection during the final round is slightly better than alternative decision rules (including a decision by lottery) in identifying applicants' potential. Nevertheless, measured by future performance, the gain from rigorous jury assessments relative to modest and cheaper selection methods is minimal. Our conclusions are maintained under several robustness checks.
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In: CESifo Working Paper Series No. 6110
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