Question: Specific OJT. (Milgrom 85 Roberts, revised) Workers who are laid off from their jobs generally receive lower wages once they find new jobs (Fact 1). Moreover, the wage reduction appears to be persistent—for many years, wages are lower than they would have been had the worker keep his her old job (Fact 2). Moreover, the wage loss differs by the type of job—relatively unskilled labourers such as fast-food workers or retail clerks suffered a smaller wage decline than did certain kinds of skilled labour, such as production workers in automobile or airplane manufacturing plants (Fact 3). What key insight explains all three of these facts?

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