Job-to-job transitions, sorting, and wage growth

David Jinkins and Annaïg Morin ()

Labour Economics, 2018, vol. 55, issue C, 300-327

Abstract: In this paper we measure the relative contribution of firm effects and match quality to wage growth experienced by workers moving between jobs. We provide evidence that firm effects only explain a small share of the observed wage dynamics. We also show that standard assumptions on match quality used to estimate fixed-effect wage models are not well supported in Danish data. We propose an alternative strategy to estimate an additive model of wage changes that includes a freely-varying match effect for all but a subset of job changers. Using estimates from Danish linked worker-firm data, we find that 44% of the wage growth experienced by job-to-job movers is attributable to an improvement in the quality of the worker-firm match, and 66% of the variance of wage growth is explained by the variance of the change in match effects.

Keywords: Job mobility; Fixed-effect wage models; Panel data models; Assortative matching (search for similar items in EconPapers)
JEL-codes: C23 J62 J63 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Job-to-Job Transitions, Sorting, and Wage Growth (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:55:y:2018:i:c:p:300-327

DOI: 10.1016/j.labeco.2018.10.008

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