Identifying Sorting, In Theory
AbstractWe argue that using wage data alone, it is virtually impossible to identify whether Assortative Matching between worker and ﬁrm types is positive or negative. In standard competitive matching models the wages are determined by the marginal contribution of a worker, and the marginal contribution might be higher or lower for low productivity ﬁrms depending on the production function. For every production function that induces positive sorting we can ﬁnd a production function that induces negative sorting but generates identical wages. This arises even when we allow for non-competitive mismatch, for example due to search frictions. Even though we cannot identify the sign of the sorting, we can identify the strength, i.e., the magnitude of the cross-partial, and the associated welfare loss. While we show analytically that standard ﬁxed eﬀects regressions are not suitable to recover the strength of sorting, we propose an alternative procedure that measures the strength of sorting in the presence of search frictions independent of the sign of the sorting.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 581.
Date of creation: 2009
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Other versions of this item:
- Eeckhout, Jan & Kircher, Philipp, 2009. "Identifying Sorting: In Theory," IZA Discussion Papers 4004, Institute for the Study of Labor (IZA).
- Jan Eeckhout & Philipp Kircher, 2009. "Identifying Sorting - In Theory," PIER Working Paper Archive 09-007, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gautier, Pieter A & Teulings, Coen N, 2003.
"How Large are Search Frictions?,"
CEPR Discussion Papers
3861, C.E.P.R. Discussion Papers.
- Pieter A. Gautier & Coen N. Teulings, 2003. "How Large are Search Frictions?," Tinbergen Institute Discussion Papers 03-026/3, Tinbergen Institute, revised 22 Aug 2005.
- Gautier, Pieter A & Teulings, Coen N, 2005. "How Large are Search Frictions?," CEPR Discussion Papers 5229, C.E.P.R. Discussion Papers.
- Pieter Gautier & Coen Teulings, 2005. "How Large are Search Frictions," 2005 Meeting Papers 175, Society for Economic Dynamics.
- Mendes, Rute & van den Berg, Gerard J. & Lindeboom, Maarten, 2007.
"An Empirical Assessment of Assortative Matching in the Labor Market,"
IZA Discussion Papers
3053, Institute for the Study of Labor (IZA).
- Mendes, Rute & van den Berg, Gerard J. & Lindeboom, Maarten, 2010. "An empirical assessment of assortative matching in the labor market," Labour Economics, Elsevier, vol. 17(6), pages 919-929, December.
- Rute Mendes & Gerard J. van den Berg & Maarten Lindeboom, 2007. "An Empirical Assessment of Assortative Matching in the Labor Market," Carlo Alberto Notebooks 62, Collegio Carlo Alberto.
- Mendes, Rute & van den Berg, Gerard J & Lindeboom, Maarten, 2007. "An empirical assessment of assortative matching in the labor market," Working Paper Series 2007:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Jan Eeckhout & Philipp Kircher, 2010.
"Sorting and Decentralized Price Competition,"
Econometric Society, vol. 78(2), pages 539-574, 03.
- Jean-Marc Robin & Costas Meghir & Jeremy Lise, 2009.
"Matching, Sorting and Wages,"
2009 Meeting Papers
180, Society for Economic Dynamics.
- Jesper Bagger & Rasmus Lentz, 2008. "An Equilibrium Model of Wage Dispersion with Sorting," 2008 Meeting Papers 271, Society for Economic Dynamics.
- Alp Atakan, 2005.
"Assortative Matching with Explicit Search Costs,"
2005 Meeting Papers
218, Society for Economic Dynamics.
- Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
- Sattinger, Michael, 1975. "Comparative Advantage and the Distributions of Earnings and Abilities," Econometrica, Econometric Society, vol. 43(3), pages 455-68, May.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.