Xiaodong Fan and Jed De Varo
Using NLSY data, we show that job hopping is associated with lower wages for college graduates (but not high school graduates), controlling for ability, labor market experience, and current job tenure. The effect is most pronounced for job tenures less than one year, strongest for early-career workers, and mitigated when job hopping severs matches that were formed during economic downturns.
A model of employer learning is proposed in which prior job history signals worker ability. We analyze it both for symmetric and asymmetric employer learning, showing that the equilibrium under asymmetric learning is consistent with the evidence for college graduates.
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