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Complementarity and Advantage in the Competing Auctions of Skills

Author

Listed:
  • Alex Xi He

    (Department of Economics, MIT)

  • John Kennes

    (Department of Economics and Business Economics, Aarhus University, Denmark)

  • Daniel le Maire

    (University of Copenhagen)

Abstract

We use a directed search model to develop estimation procedures for the identification of worker and firm rankings from labor market data. These methods allow for a general specification of production complementarities and the possibility that higher ranked workers are not more productive in all firms. We also offer conditions for a positive/negative assortative matching that incorporate the possibility of a stochastic job ladder with on-the-job search. Numerical simulations relate the implications of the model to the implications of fixed effect regressions and give further insights into the performance of our estimation procedures. Finally, we evaluate evidence for Denmark using our methods and we show that workers are highly sorted and that higher type workers are less productive than lower type workers while employed in lower type jobs.

Suggested Citation

  • Alex Xi He & John Kennes & Daniel le Maire, 2018. "Complementarity and Advantage in the Competing Auctions of Skills," Economics Working Papers 2018-10, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2018-10
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    File URL: ftp://ftp.econ.au.dk/afn/wp/18/wp18_10.pdf
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    References listed on IDEAS

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    Cited by:

    1. Kennes, John & le Maire, Daniel & Roelsgaard, Sebastian T., 2020. "Equivalence of canonical matching models," Games and Economic Behavior, Elsevier, vol. 124(C), pages 169-182.

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    More about this item

    Keywords

    Directed search; sorting; wage dynamics; auctions;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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