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Composite Sorting

Author

Listed:
  • Job Boerma
  • Aleh Tsyvinski
  • Ruodu Wang
  • Zhenyuan Zhang

Abstract

We propose a new sorting framework: composite sorting. Composite sorting comprises of (1) distinct worker types assigned to the same occupation, and (2) a given worker type simultaneously being part of both positive and negative sorting. Composite sorting arises when fixed investments mitigate variable costs of mismatch. We completely characterize optimal sorting and additionally show it is more positive when mismatch costs are less concave. We then characterize equilibrium wages. Wages have a regional hierarchical structure - relative wages depend solely on sorting within skill groups. Quantitatively, composite sorting can generate a sizable portion of within-occupations wage dispersion in the US.

Suggested Citation

  • Job Boerma & Aleh Tsyvinski & Ruodu Wang & Zhenyuan Zhang, 2023. "Composite Sorting," Papers 2303.06701, arXiv.org, revised Aug 2023.
    • Handle: RePEc:arx:papers:2303.06701
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    References listed on IDEAS

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