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Sorting on Skills and Preferences: Tinbergen Meets Sattinger

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  • Dupuy Arnaud

    (METEOR)

Abstract

This paper proposes an assignment model where sorting occurs on attributes that are simultaneously a skill (Sattinger, 1979) and a preference (Tinbergen, 1956). The key feature of this model is that the wage function admits both jobs'' and workers'' attributes as arguments. Since this function is generically nonlinear (Ekeland et al., 2004), even under positive assortative matching, the correlation between the contribution of workers'' attributes to wages and that of jobs'' attributes can vary from -1 to 1 depending on the parameters of the model, i.e. preference, technology and the distribution of both sets of attributes. The paper discusses a closed form solution of the model, presents conditions for the nonparametric identification of compensating wage differentials and nonadditive marginal utility functions using observations from a single hedonic market and proposes anonparametric estimator.

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Bibliographic Info

Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 017.

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Date of creation: 2011
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Handle: RePEc:dgr:umamet:2011017

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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm

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Keywords: microeconomics ;

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  1. Heckman, James J. & Matzkin, Rosa & Nesheim, Lars, 2009. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," IZA Discussion Papers 4329, Institute for the Study of Labor (IZA).
  2. Pierre-Andre Chiappori & Robert McCann & Lars Nesheim, 2007. "Hedonic price equilibria, stable matching, and optimal transport: equivalence, topology, and uniqueness," CeMMAP working papers CWP23/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2002. "Identifying Hedonic Models," American Economic Review, American Economic Association, vol. 92(2), pages 304-309, May.
  4. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  5. Jean-Marc Robin & Costas Meghir & Jeremy Lise, 2008. "Matching, Sorting and Wages," 2008 Meeting Papers 273, Society for Economic Dynamics.
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