Abstract
A model of job screening is developed in which firms make wage offers to workers based on an imperfect evaluation of their abilities. If large firms have higher costs of acquiring information about workers, they screen workers with less accuracy and choose a wage compensation scheme different from the one small firms choose. This generates the often observed positive correlation between firm size and wages. The model also predicts that wage structure, and perhaps wage dispersion, will differ by firm size and that individuals who acquire more schooling will also choose to work in a larger firm. These hypotheses are tested and supported using data from the National Longitudinal Survey.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
