Jaime Arellano-Bover (Yale University) (webinar)

We document evidence consistent with large disparities across firms in the on-the-job learning they provide to their young employees, using administrative datasets from Brazil and Italy. We discretize firm “classes” using a clustering methodology which groups together firms with similar distributions of unexplained wage growth. Equipped with this categorization of firms—which our conceptual framework interprets as skill-learning classes—we document three main results. First, Mincerian returns to experience vary substantially across experience acquired in different firm classes, and the magnitude of this type of heterogeneity is associated with significant shifts across the distribution of early-career wage growth. Second, past experience at firms with better on-the-job learning is associated with subsequent jobs featuring greater non-routine task content. Third, firm and workforce observables only mildly predict skill-learning opportunities across firms. Our findings hold among involuntarily displaced workers who have no seniority at their new jobs, reinforcing a human capital interpretation over seniority-based pay schemes.

(joint with Fernando Saltiel)