CHOOSING WORKERS QUALIFICATIONS - NO EXPERIENCE NECESSARY

We examine an employer's preferences regarding the education, prior ex perience, or training of the worker she hires. Although a worker's edu cation may be observable, his productivity on the job is often private ly observed. Higher levels of education increase the chances that the worker will have high productivity on the job. The employer's preferen ces are shown to depend critically on the nature of the adverse select ion problem she faces: high levels of education are favored for worker s with idiosyncratic skills, while low levels of education are preferr ed for versatile workers, whose skills are transferable.