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An Empirical Assessment of Assortative Matching in the Labor Market

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Author Info
Rute Mendes
Gerard J. van den Berg
Maarten Lindeboom

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Abstract

In labor markets with worker and firm heterogeneity, the matching between firms and workers may be assortative, meaning that the most productive workers and firms team up. We investigate this with longitudinal population-wide matched employer-employee data from Portugal. Using dynamic panel data methods, we quantify a firm-specific productivity term for each firm, and we relate this to the skill distribution of workers in the firm. We find that there is positive assortative matching, in particular among long-lived firms. Using skill-specific estimates of an index of search frictions, we find that the results can only to a small extent be explained by heterogeneity of search frictions across worker skill groups.

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Publisher Info
Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 62.

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Length: 37 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:cca:wpaper:62

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Related research
Keywords: positive assortative matching; matched employer-employee data; productivity; skill; unobserved heterogeneity; sorting; fixed effects.;

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Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs

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