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Job matching within and across firms

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  • Elena Pastorino
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    Abstract

    In order to analyze careers both within and across firms, this paper proposes a matching model of the labor market that extends existing models of job assignment and learning about workers’ abilities. The model accounts for worker mobility across jobs and firms, for varying degrees of generality of ability, and for the possibility that firms affect the information they acquire about workers through job assignment. I characterize equilibrium assignment and wages, and show how, depending on how abilities and jobs are distributed across firms, equilibrium gives rise to widely varying patterns of job mobility within firms and turnover across firms, even if matching would be perfectly assortative in the absence of uncertainty. The implied job and wage dynamics display features that are consistent with a broad set of empirical findings on careers in firms and the labor market. In particular, workers can experience gradual promotions and wage increases following successful performance but few or no demotions when employed by the same firm. The model also produces turnover across firms and occupations after both successful and unsuccessful experiences, leading to wage increases or decreases following a firm or occupation change. Overall, the results in this paper provide a unified framework in which to interpret the dynamics of jobs and wages in firms and the labor market.

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    Bibliographic Info

    Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 482.

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    Date of creation: 2013
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    Handle: RePEc:fip:fedmsr:482

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    Keywords: Labor market;

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    1. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation by Skill," NBER Working Papers 5718, National Bureau of Economic Research, Inc.
    2. Christopher Ferrall, 1997. "Empirical Analysis of Occupational Hierarchies," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 1-34.
    3. Moshe Buchinsky & Denis Fougère & Francis Kramarz & Rusty Tchernis, 2008. "Interfirm Mobility, Wages, and the Returns to Seniority and Experience in the U.S," Caepr Working Papers 2008-006, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    4. Flinn, Christopher J, 1986. "Wages and Job Mobility of Young Workers," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S88-S110, June.
    5. Michael Waldman, 1983. "Job Assignments, Signalling nad Efficiency," UCLA Economics Working Papers 286, UCLA Department of Economics.
    6. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-120, December.
    7. Christopher Ferrall & Kjell G. Salvanes & Erik Ø. Sørensen, 2009. "Wages And Seniority When Coworkers Matter: Estimating A Joint Production Economy Using Norwegian Administrative Data," Working Papers 1200, Queen's University, Department of Economics.
    8. Moscarini, Giuseppe & Vella, Francis, 2008. "Occupational Mobility and the Business Cycle," IZA Discussion Papers 3369, Institute for the Study of Labor (IZA).
    9. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
    10. Bernhardt, Dan, 1995. "Strategic Promotion and Compensation," Review of Economic Studies, Wiley Blackwell, vol. 62(2), pages 315-39, April.
    11. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
    12. Axel Anderson & Lones Smith, 2010. "Dynamic Matching and Evolving Reputations," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 3-29.
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