THE LINK BETWEEN ABILITY AND SPECIALIZATION - AN EXPLANATION FOR OBSERVED CORRELATIONS BETWEEN WAGES AND MOBILITY RATES

Wage levels and turnover rates are negatively correlated across types of employment, and this fact is often interpreted as evidence that hig h-wage jobs are rationed. A simple training model illustrates, however , that this correlation may arise because able workers have an incenti ve to choose highly specialized jobs. In any job, the most able worker s possess the most valuable stocks of specific skills and therefore fa ce the highest mobility casts. Thus, able workers may have a comparati ve advantage in specialized employments. Data from the national Longit udinal Survey of Youth provide an opportunity to evaluate the merits o f the training model developed here. Data on worker training and mobil ity provide support for several implications of the model. The model a lso provides new ways to interpret existing results in the literature on interindustry wage differentials.