The consequences of being different - Statistical discrimination and the school-to-work transition

Barbara Mueller 2, Stefan C. Wolter1
1University of Bern, Switzerland, 2Swiss Federal Institute for Vocational Education and Training, Switzerland

When information about the true abilities of job-seekers and applicants are hard to get, statistical discrimination by employers can be an efficient strategy in the hiring and wage setting process. But statistical discrimination can induce costs, if labor relations cannot be terminated in the short term and wages are fixed over a certain period. It is therefore interesting to know, by how much employers rely on easily observable characteristics and by how much they are influenced by hard to get information in their actions. In this paper we use a unique longitudinal survey that follows the PISA 2000 students in their educational and work-life career. We test whether deviance in the PISA test scores from what one would have predicted based on observable characteristics, influences the probability to succeed in the transition from compulsory school into a firm-based apprenticeship and the probability to get an apprenticeship contract in a profession with higher intellectual demand. Our results suggest that hard-to-get information plays a significant role in the transition, but in an asymmetric manner. Underachievers, students with test-scores significantly below their predicted group mean, face disadvantages in the transition, whereas overachievers do not seem to realize profit from their positive deviation.

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