Does Employer Learning Vary by Occupation? [Job Market Paper]

In this paper I provide evidence that initial occupational assignments a¤ect the ability revelation of young workers in the labor market. Di¤erences in employer learning about worker’s ability carry two implications: First, the growth in wage dispersion with experience will di¤er across initial occupations; Second, the growth in the coe¢ cient of a variable that employers initially do not observe, such as the Armed Forces Quali…cation Test (AFQT) score, will also vary across occupations. Empirically, I …nd that occupations with high growth in the variance of residual wages over the …rst ten years of the worker’s career are also the occupations with high growth in the AFQT coe¢ cient. In contrast, the results for occupations with low growth in the variance of residual wages suggest that employers have learned about the worker’s AFQT score at the time of hire. I also investigate the informational role of race across occupations. The coe¢ cient on the Black variable in occupations with low growth in the residual variance is positive and decreases over time, but the racial gap widens over time in occupations with high growth in the residual variance. These results have implications for di¤erent topics in labor economics, such as occupational mobility, and the signaling value of education. JEL Codes: J24, J31, J71, J62