A Distributional Framework for Matched Employer Employee Data

Thibaut Lamadon, Elena Manresa and Stéphane Bonhomme
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Elena Manresa: MIT Sloan

No 1399, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We develop an identification and estimation strategy to quantify the contributions of firm and worker heterogeneity to wages. We allow for unrestricted interaction effects between firm and worker unobservables, and for the possibility of sorting. Pooling cross-sectional observations with information coming from the joint distribution of wages of job movers, we establish nonparametric identification in short panels. Applications of the method include testing restrictions imposed by theoretical matching models, and quantifying the contributions of firms and workers to changes in wage inequality. We illustrate our approach using Swedish matched employer-employee panel data.

Date: 2015
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Working Paper: A distributional framework for matched employer employee data (2017)
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