Better Workers Move to Better Firms: A Simple Test to Identify Sorting

Francesco Devicienti () and Cristian Bartolucci

No 249, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: We propose a test that uses information on workers' mobility, wages and firms' profits to identify the sign and strength of assortative matching. The basic intuition underlying our empirical strategy is that, in the presence of positive (negative) assortative matching, good workers are more (less) likely to move to better firms than bad workers. Assuming that agents' payoffs are increasing in their own types allows us to use within-firm variation on wages to rank workers by their types and firm profits to rank firms. We exploit a panel data set that combines Social Security earnings records for workers in the Veneto region of Italy with detailed balance-sheet information for employers. We find robust evidence that positive assortative matching is a pervasive phenomenon in the labor market. This result is in contrast with what we find from correlating the worker and firm fixed effects in standard Mincerian wage equations.

Date: 2013
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: BetterWorkers Move to Better Firms: A Simple Test to Identify Sorting (2013)
Working Paper: Better Workers Move to Better Firms: A Simple Test to Identify Sorting (2013)
Working Paper: Better Workers Move to Better Firms: A Simple Test to Identify Sorting (2012)
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