Working Paper: NBER ID: w22387
Authors: Kevin Lang; Russell Weinstein
Abstract: We show that in labor market models with adverse selection, otherwise observationally equivalent workers will experience less wage growth following a period in which they change jobs than following a period in which they do not. We find little or no evidence to support this prediction. In most specifications the coefficient has the opposite sign, sometimes statistically significantly so. When consistent with the prediction, the estimated effects are small and statistically insignificant. We consistently reject large effects in the predicted direction. We argue informally that our results are also problematic for a broader class of models of competitive labor markets.
Keywords: adverse selection; labor market; wage growth; job mobility
JEL Codes: J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| movers experience slower wage growth compared to stayers (J62) | adverse selection hypothesis (D82) |
| adverse selection hypothesis (D82) | wage growth for movers (J62) |
| competitive bidding by raiding firms (G34) | wage growth for movers (J62) |
| job mobility (J62) | wage growth (J31) |