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The Changing Value of Employment

Author

Listed:
  • Alonzo, Davide
  • Gallipoli, Giovanni

Abstract

Do workers derive different returns from similar jobs? Are earnings informative about changes in overall returns from work? We estimate the value of worker-occupation matches in an equilibrium model that distinguishes between wages and latent returns. We define a measure of employment rents that has three properties: (i) it reflects both wages and unobserved match values; (ii) it delivers a monetary metric for compensating differentials; (iii) it illustrates how the marginal workers within a match affect the rents of others. We show that earnings data reliably approximate the evolution of average rents between 1980 and 2018 despite differences in unobserved match values. The results highlight a dichotomy: while the existence of rents is due to latent values, their evolution is driven by productivity and technology.

Suggested Citation

  • Alonzo, Davide & Gallipoli, Giovanni, 2023. "The Changing Value of Employment," CEPR Discussion Papers 17943, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:17943
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    File URL: https://cepr.org/publications/DP17943
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    More about this item

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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