EDUCATIONAL CREDENTIALS AND TRUST IN THE LABOR-MARKET

When productivity is costly to measure, employers and employees will e stablish trust relationships to their mutual benefit. Our thesis is th at in such relationships educational credentials are important to get entry to the job. Dutch Labor Force Sample Surveys from 1981 and 1985 are used to estimate the relationship between educational credentials and job level within different firm sizes and different sectors of the economy. We find a stronger relationship within large firms than with in small firms and within so called 'high trust' sectors than in 'low trust' sectors. Analyzing the differences between the two periods adds support to our thesis.