Job Assignments, Signalling, and Efficiency
Volume: Volume 15, No. 2
Issue: Summer 1984
Pages: pp. 255-267
Authors: Michael Waldman
Title: Job Assignments, Signalling, and Efficiency
Abstract: This article analyzes a model in which information about a worker's ability is only directly revealed to the firm employing the worker; other firms, however, use the worker's job assignment as a signal of ability. Three results recur throughout the analysis. First, wage rates tend to be more closely associated with jobs than with ability levels. Second, there is frequently an inefficient assignment of workers to jobs (i.e., even when a firm has complete information about a worker's output). Third, the severity of this inefficiency tends to be negatively correlated with the level of firm-specific human capital in the economy.
JEL Classification
Microeconomics Theory of Production (0223)
Labor Economics: Theory and Empirical Studies Illustrating Theory (8210)