Learning about the Match Quality: Information Flows and Labor Market Outcomes of Skill Groups

Abstract

Workers with higher skills (more education) have lower unemployment rates, lower probabilities of separating from their jobs, and lower probabilities of losing their jobs conditional on tenure. This paper analyzes to what extent these differences can come from variations in the speed of learning about the suitability of an employee for the job (match quality) by skill. The speed of learning would affect labor market outcomes not only directly, but also through affecting firms' selectiveness in choosing whom to hire.