Economics question: The job market seems like a lemon market, in that assessing ability in an interview is hard. But this suggests that job offers should tend to come in at a discount to current earnings; in software at least the exact opposite is true. What's going on here?
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Replying to @cperciva
It’s not a discount to current earnings it’s a discount to “the wage they would offer if your skills were known with certainty.”
1 reply 0 retweets 13 likes -
e.g. A great deal of the wage premium for being publicly known is not because your skills are higher it is because your error bars smaller.
1 reply 0 retweets 7 likes -
Replying to @patio11
Sure. But my point is, it seems like the error bars should be much smaller for a company which has employed someone for years than for a new company after a few hours of interviews. So why don't existing employers bid higher?
5 replies 0 retweets 2 likes
The new employer "knows" (perhaps not consciously) that your current employer *also* underbid, and has not fired you, therefore your true value likely above previous underbid but still mad error bars.
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