Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84354
Authors: 
Streb, Jorge M.
Year of Publication: 
2006
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA: Área: Economía 326
Abstract: 
What happens to job market signaling under two-dimensional asymmetric information? With 2 types of productivity and noise, the equilibrium remains separating if an extended single-crossing condition is satisfied. If not, there are partially pooling equilibria where only extreme types can be distinguished, and supplementary information is needed. On-the-job interaction gives employers private information on productivity, which employment relationships may reveal to the market. While sticky wages lead to public revelation of this private information through dismissals, flexible wages do not, allowing employers to do cream skimming. Beyond the 2x2 case, employment relationships are always a noisy sign, so education is valuable as a life-time job market signal for high-ability workers.
Subjects: 
two-dimensional asymmetric information
private information
informational rents
single-crossing
signals
signs
JEL: 
J31
D10
Document Type: 
Working Paper

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