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The employer-learning literature finds support for statistical discrimination on the basis of schooling. How economically relevant statistical discrimination is depends on how fast employers learn about workers' productive types. This article is the first to estimate the speed of employer learning. Employers learn quickly. Initial expectation errors decline by 50% within 3 years. This estimate places an upper bound on the contribution of signaling. This bound varies with the speed of employer learning and with discount rate. For a wide range of parameter values, the contribution of signaling to the gains from schooling is less than 25%.

We thank Dan Restuccia, Matt Sigelman, and Bledi Taska for providing the Burning Glass Technologies data, as well as Shiwani Chitroda, Nathan Maves-Moore and Fan Xia for excellent research assistance. This research was undertaken, in part, thanks to funding from the Canada Research Chairs program. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We thank Dan Restuccia, Matt Sigelman, and Bledi Taska for providing the Burning Glass Technologies data, as well as Shiwani Chitroda, Nathan Maves-Moore and Fan Xia for excellent research assistance. This research was undertaken, in part, thanks to funding from the Canada Research Chairs program. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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