High Wage Workers Match with High Wage Firms: Clear Evidence of the Effects of Limited Mobility Bias
Martyn J. Andrews (martyn.andrews@manchester.ac.uk),
Leonard Gill (leonard.gill@manchester.ac.uk),
Thorsten Schank and
Richard Upward
Additional contact information
Martyn J. Andrews: University of Manchester
Leonard Gill: University of Manchester
No 6662, IZA Discussion Papers from Institute of Labor Economics (IZA)
Abstract:
Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.
Keywords: fixed effects; linked employer-employee panel data; limited mobility bias (search for similar items in EconPapers)
JEL-codes: C23 J20 J30 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2012-06
New Economics Papers: this item is included in nep-bec, nep-eff, nep-lab and nep-lma
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Citations: View citations in EconPapers (73)
Published - published in: Economics Letters, 2012, 117 (3), 824-827
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Journal Article: High wage workers match with high wage firms: Clear evidence of the effects of limited mobility bias (2012)
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