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Title: Social Effects in Employer Learning: An Analysis of Siblings
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Rao, Neel |
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Social Effects in Employer Learning: An Analysis of Siblings Labour Economics 38 (January 2016): 24-36. Also: http://www.sciencedirect.com/science/article/pii/S0927537115001104 Cohort(s): NLSY79 Publisher: Elsevier Keyword(s): Armed Forces Qualifications Test (AFQT); Human Capital; Siblings; Wages This paper examines whether wages are based on information about personal contacts. I develop a theory of labor markets with imperfect information in which related workers have correlated abilities. I study wage setting under two alternative processes: individual learning, under which employers observe only a worker's own characteristics, and social learning, under which employers also observe those of a relative. Using sibling data from the NLSY79, I test for a form of statistical nepotism in which a sibling's performance is priced into a worker's wage. Empirically, an older sibling's test score has a larger impact on a younger sibling's log wage than a younger sibling's test score has on an older sibling's log wage. The estimates provide strong support for social effects in employer learning. |
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Bibliography Citation
Rao, Neel. "Social Effects in Employer Learning: An Analysis of Siblings." Labour Economics 38 (January 2016): 24-36.
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