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Employer Learning and General Human Capital

Author

Listed:
  • Jan Eeckhout

Abstract

This paper extends the classic dynamic employer learning model to a setting where there is uncertainty about the productivity value of general human capital, rather than about match-specific value. The focus is on rent extraction, which involves asymmetric common value auctions. Despite employer competition, full rents cannot be extracted by the employee. Surprisingly, for sufficient asymmetry between employers, the rents extracted by a second price auction disappear as the information becomes almost-complete. In contrast, with complete information full rents are extracted. Wage dynamics are characterized by the option value of future rent extraction. Some of the results are similar to those under match-specific human capital; others differ substantially.

Suggested Citation

  • Jan Eeckhout, 2004. "Employer Learning and General Human Capital," 2004 Meeting Papers 88, Society for Economic Dynamics.
    • Handle: RePEc:red:sed004:88
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    Cited by:

    1. Heski Bar-Isaac & Ian Jewitt & Clare Leaver, 2007. "Information and Human Capital Managment," Working Papers 07-28, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Joshua C. Pinkston, 2009. "A Model of Asymmetric Employer Learning with Testable Implications," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 367-394.
    3. Virag, Gabor, 2007. "Repeated common value auctions with asymmetric bidders," Games and Economic Behavior, Elsevier, vol. 61(1), pages 156-177, October.

    More about this item

    Keywords

    Matching. Wage Dynamics. Turnover. Learning. Almost-Complete Information.;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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