The Role of Hard-to-Obtain Information on Ability for the School-to-Work Transition

Müller, Barbara; Wolter, Stefan C. (2014). The Role of Hard-to-Obtain Information on Ability for the School-to-Work Transition. Empirical economics, 46(4), pp. 1447-1471. Springer 10.1007/s00181-013-0709-2

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When information about the abilities of job seekers is difficult to obtain, statistical discrimination by employers may be an efficient strategy in the hiring and wage-setting process. In this article, we use a unique, longitudinal survey that follows the PISA 2000 students in their early educational and work–life careers. We find that a deviance in the PISA test scores from what one would have predicted based on easy-to-obtain observable characteristics influences the probability of succeeding in the transition from compulsory schooling to a firm-based apprenticeship significantly but in a non-symmetric way. Only those who had a test result below their predicted result have significantly lower chances of getting an apprenticeship. We also find evidence that the importance of hard-to-obtain information on ability is further revealed in the course of the apprenticeship.

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