NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Formal Test of Assortative Matching in the Labor Market

John M. Abowd, Francis Kramarz, Sébastien Pérez-Duarte, Ian Schmutte

NBER Working Paper No. 15546
Issued in November 2009
NBER Program(s):   LS

We estimate a structural model of job assignment in the presence of coordination frictions due to Shimer (2005). The coordination friction model places restrictions on the joint distribution of worker and firm effects from a linear decomposition of log labor earnings. These restrictions permit estimation of the unobservable ability and productivity differences between workers and their employers as well as the way workers sort into jobs on the basis of these unobservable factors. The estimation is performed on matched employer-employee data from the LEHD program of the U.S. Census Bureau. The estimated correlation between worker and firm effects from the earnings decomposition is close to zero, a finding that is often interpreted as evidence that there is no sorting by comparative advantage in the labor market. Our estimates suggest that this finding actually results from a lack of sufficient heterogeneity in the workforce and available jobs. Workers do sort into jobs on the basis of productive differences, but the effects of sorting are not visible because of the composition of workers and employers.

download in pdf format
   (1274 K)

email paper

This paper is available as PDF (1274 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15546

Users who downloaded this paper also downloaded these:
Graham, Imbens, and Ridder w14860 Complementarity and Aggregate Implications of Assortative Matching: A Nonparametric Analysis
Shimer w8501 The Assignment of Workers to Jobs In an Economy with Coordination Frictions
Abowd, Haltiwanger, Lane, McKinney, and Sandusky w13043 Technology and the Demand for Skill:An Analysis of Within and Between Firm Differences
Edmans and Gabaix w15545 Tractability in Incentive Contracting
Boyd, Lankford, Loeb, and Wyckoff w9878 Analyzing the Determinants of the Matching Public School Teachers to Jobs: Estimating Compensating Differentials in Imperfect Labor Markets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us