Differences in On-the-Job Learning Across Firms

Abstract

We examine whether experience accumulated in firms offering different learning opportunities affects early career wage growth. We take advantage of matched employee-employer data sets from Brazil and Italy. We discretize firm “classes” using a clustering methodology which groups together firms with similar distributions of unexplained wage growth. We introduce a conceptual framework which posits that different firm classes encompass firms offering heterogeneous learning opportunities. Preliminary results indicate that the 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. Our findings hold among involuntarily displaced workers who have no seniority at their new jobs, reinforcing a human capital interpretation as opposed to seniority-based pay schemes. We lastly train a machine learning algorithm to examine the characteristics of firms with strong learning opportunities