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The spatial sorting and matching of skills and firms

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  • Giordano Mion
  • Paolo Naticchioni

Abstract

In this paper we make use of a matched employer-employee database for Italy to look at the spatial distribution of wages. Using this rich database we aim to open up the black box of agglomeration economies exploiting the micro dimension of interaction among economic agents, both individuals and firms. We provide evidence that firm size and, especially, skills are sorted across space and account for a large portion of the spatial wage variation. Our data also support the assortative matching hypothesis, which we show not to be driven by co-location of good workers and firms. Finally, we point out that assortative matching is negatively related to local market size.

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File URL: http://eprints.lse.ac.uk/42670/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 42670.

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Date of creation: 2009
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Publication status: Published in Canadian Journal of Economics, 2009, 42(1), pp. 28-55. ISSN: 1540-5982
Handle: RePEc:ehl:lserod:42670

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Keywords: spatial externalities; individual panel-data; skills; firms’ heterogeneity; sorting; assortative matching;

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