We would like to thank Edward Lazear and Regina Riphahn for very constructive feedback. We are also grateful for helpful comments from participants of seminars at the University of Zurich, the annual meeting of the Society for the Advancement of Socio‐Economics (SASE), and the personnel economics colloquium. This paper was started while Prof. Dr. Backes‐Gellner was visiting at the Institute for Research on Labor and Employment at the University of California Berkeley. She gratefully acknowledges the institute's hospitality. Last but not least, we thank the Swiss Federal Statistical Office for data provision. This study is partly funded by the Swiss State Secretariat for Education, Research, and Innovation through its Leading House on the Economics of Education, Firm Behaviour and Training Policies.