670/2023 Jaime Arellano-Bover, Fernando Saltiel

We present evidence consistent with large disparities across firms in the on-the-job learning their young employees experience, using administrative datasets from Brazil and Italy. We categorize firms into discrete “classes”—which our conceptual framework interprets as skill-learning classes—using a clustering methodology that groups together firms with similar distributions of unexplained wage growth. Mincerian returns to experience vary widely across experiences acquired in different firm classes. Moreover, past experiences at firms with better on-the-job learning lead to subsequent jobs featuring greater non-routine task content. Three empirical tests leveraging firm stayers and movers, hiring wages, and displaced workers point towards a portable and general human capital interpretation. Heterogeneous employment experiences explain an important share of wage variance by age 35, thus contributing to shape wage inequality. Lastly, we show that firms’ observable attributes only mildly predict on-the-job learning opportunities.

Public Policy

The Social Science Research Network

https://dx.doi.org/10.2139/ssrn.3870204