 Ranking Firms Using Revealed PreferenceNo 66, 2016 Meeting Papers from Society for Economic Dynamics Abstract: Firms account for a substantial share of earnings inequality. Although the standard expla- nation for why is that search frictions support an equilibrium with rents, this paper finds that compensating differentials are at least as important. To reach this finding, this paper develops a structural search model and estimates it on U.S. administrative data with 1.5 million firms and 100 million workers. The model analyzes the revealed preference information contained in how workers move between firms. Compensating differentials are revealed when workers systemat- ically move to lower-paying firms, while rents are revealed when workers systematically move to higher-paying firms. With the number of parameters proportional to the number of firms (1.5 million), standard estimation approaches are infeasible. The paper develops an estimation approach that is feasible for data on this scale. The approach uses tools from numerical linear algebra to measure central tendency of worker flows, which is closely related to the ranking of firms revealed by workers’ choices. Date: 2016 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:66 Access Statistics for this paper More papers in 2016 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC. |
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