The Happiness Gains from Sorting and Matching in the Labor Market

Simon Luechinger, Alois Stutzer and Rainer Winkelmann

No 45, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on subjective well-being it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. In an analysis with data from the European Social Survey, we find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocation of workers to the two sectors. A companion analysis of data from the German Socio-Economic Panel shows that selection on unobservables is reduced once we include additional controls for preference heterogeneity.

Keywords: Matching; ordered probit; public sector employment; selection; switching regression; subjective well-being (search for similar items in EconPapers)
JEL-codes: D60 I31 J24 J45 (search for similar items in EconPapers)
Pages: 39 p.
Date: 2007
New Economics Papers: this item is included in nep-dcm, nep-hap, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: The happiness gains from sorting and matching in the labor market (2007)
Working Paper: The Happiness Gains from Sorting and Matching in the Labor Market (2006)
Working Paper: The Happiness Gains From Sorting and Matching in the Labor Market (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp45

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