Workers' abilities are hidden information. Thus, when hiring, firms first use education as a proxy for abilities, and then learn about workers' abilities by tracking products. If this learning is asymmetric inside and outside major firms' internal labor markets, the market expects work...

Long-term employment and internal promotion at major firms are common in developed economies. We examine the long-range changes in the returns on skill elements and training using a micro dataset of a Japanese ironworks. We show that, 1) the return on schooling rose from the late 1940s and that...