Employer Learning and General Human Capital

This paper extends the classic dynamic employer learning model to a setting where there is uncertainty about the productivity value of general human capital, rather than about match-specific value. The focus is on rent extraction, which involves asymmetric common value auctions. Despite employer competition, full rents cannot be extracted by the employee. Surprisingly, for sufficient asymmetry between employers, the rents extracted by a second price auction disappear as the information becomes almost-complete. In contrast, with complete information full rents are extracted. Wage dynamics are characterized by the option value of future rent extraction. Some of the results are similar to those under match-specific human capital; others differ substantially.