Bryan Caplan: belief

Transcript context

…We would all agree, most workers don’t go back to school. Some do, of course, but most of them don’t. But wages change a lot over the course of a worker’s lifetime. If the signal from education is fixed and then wages are changing for many decades, doesn’t most of the wage story have to be human capital theory rather than signaling theory? Of course, the obvious story for change is just that people are acquiring more experience. You could have a strong version of the signaling model where you have an idea about, first of all, average productivity, and then you have an idea about average productivity gain, and then there’s not much connection at all. I don’t think that’s right. What I would say is, it is reasonable to think the signaling share goes down over time, and there is evidence this is so. However, how quickly does it go down and by how much? That’s where — there is a whole literature called the employer learning statistical discrimination literature where they do try to measure this. The usual view there is that, at minimum, you’re talking about a 10-year wait before you start getting reasonable credit even for your IQ, which is one of the easiest and most observable, most testable traits that employers value. So it makes perfect sense to me, there’s a lot of other traits where it may take a very long time. Furthermore, as I say in the book, if the model of actual employment in the real world were, “Hire someone, see if they’re good, and then if they’re not as good as you thought, fire them,” then I think your story’d make a lot more sense. The way that actual jobs usually work is, when you get someone who’s disappointing, they have to be really bad to get fired unless there’s a recession. If you do want to get rid of them, it’s much more common for there to be a little conspiracy between the bad employee and the employer to help the bad employee get another job someplace else. As I found doing the research of the book, there’s even a special word for this in what I call the termination community, the group of people who specialize in firing. They call this de-hiring. We’re not firing you, we’re de-hiring you. We’re encouraging you to find an opportunity elsewhere where you can become somebody else’s problem. Once you realize this is actually a big part of the modern labor market, the idea that someone could basically go from one job where they’re a burden to another job where they’re a burden to another one. Let me pursue this speed-of-learning question because it’s important. Let’s say you’ve hired someone, or you have a new colleague, or you have a new coauthor. How long does it take you to figure out how good they are?…

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