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.
"Asymmetric Information between Employers."
American Economic Journal: Applied Economics,
Asymmetric and Private Information; Mechanism Design
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Personnel Management; Executives; Executive Compensation