Job hopping and adverse selection in the labor market

Xiaodong Fan, Jed DeVaro

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)

Abstract

A model of employer learning (both symmetric and asymmetric) about worker ability from job histories is constructed, and testable implications are derived to detect asymmetric learning empirically. The model predicts that early-career bad job matches are particularly damaging when learning is asymmetric. Analysis of NLSY79 data reveals that job hopping is associated with lower wages for college graduates, controlling for measured ability, labor market experience, and current job tenure. Suggestive of asymmetric learning, the effect is strongest for job tenures less than one year and for early-career workers, and mitigated when job hopping severs matches that were formed during economic downturns. (JEL D82, J31, J63)

Original languageEnglish
Pages (from-to)84-138
Number of pages55
JournalJournal of Law Economics & Organization
Volume36
Issue number1
DOIs
Publication statusPublished - Mar 2020

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