Match Quality, Contractual Sorting and Wage Cyclicality

Joao Alfredo Galindo da Fonseca (), Giovanni Gallipoli () and Yaniv Yedid-Levi
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Joao Alfredo Galindo da Fonseca: University of British Columbia, Vancouver School of Economics

No 2017-076, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: This paper studies the role of match quality for contractual arrangements, wage dynamics and workers' retention. We develop a model in which profit maximizing firms offer a performance-based pay arrangement to retain workers with relatively high match-specific productivity. The key implications of our model hold in data from the NLSY79, where information about job histories and performance pay is available. We relate our findings to the literature on occupation heterogeneity and provide evidence that jobs in "cognitive" occupations have better match quality, exhibit higher prevalence of performance pay, display significant sensitivity of wages to business cycle conditions and last longer.

Keywords: match quality; contracts; heterogeneity; occupation; wages; cyclicality (search for similar items in EconPapers)
JEL-codes: E24 J33 J41 M52 M55 (search for similar items in EconPapers)
Date: 2017-10
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-mac
Note: M
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Citations: View citations in EconPapers (4)

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http://humcap.uchicago.edu/RePEc/hka/wpaper/Galind ... sorting-wage-cyc.pdf First version, July 24, 2017 (application/pdf)
http://humcap.uchicago.edu/RePEc/hka/wpaper/Galind ... cyc_revised_2018.pdf Second version, November 5, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2017-076

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