IDEAS home Printed from https://ideas.repec.org/p/cwl/cwldpp/2396.html

Labor Market Matching, Wages, and Amenities

Author

Listed:
  • Thibaut Lamadon

    (University of Chicago)

  • Jeremy Lise

    (Cornell University)

  • Costas Meghir

    (Yale University)

  • Jean-Marc Robin

    (Sciences Po)

Abstract

This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs greatly between the lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities.

Suggested Citation

  • Thibaut Lamadon & Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2024. "Labor Market Matching, Wages, and Amenities," Cowles Foundation Discussion Papers 2396, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2396
    as

    Download full text from publisher

    File URL: https://cowles.yale.edu/sites/default/files/2024-07/d2396_0.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stéphane Bonhomme & Kerstin Holzheu & Thibaut Lamadon & Elena Manresa & Magne Mogstad & Bradley Setzler, 2023. "How Much Should We Trust Estimates of Firm Effects and Worker Sorting?," Journal of Labor Economics, University of Chicago Press, vol. 41(2), pages 291-322.
    2. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    3. Stéphane Bonhomme & Thibaut Lamadon & Elena Manresa, 2019. "A Distributional Framework for Matched Employer Employee Data," Econometrica, Econometric Society, vol. 87(3), pages 699-739, May.
    4. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Escudero, Veronica & Liepmann, Hannah & Vergara, Damian, 2024. "Directed Search, Wages, and Non-wage Amenities: Evidence from an Online Job Board," IZA Discussion Papers 17211, IZA Network @ LISER.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arellano-Bover, Jaime & San, Shmuel, 2023. "The Role of Firms and Job Mobility in the Assimilation of Immigrants: Former Soviet Union Jews in Israel 1990–2019," IZA Discussion Papers 16389, IZA Network @ LISER.
    2. Federico Huneeus & Kory Kroft & Kevin Lim, 2021. "Earnings Inequality in Production Networks," NBER Working Papers 28424, National Bureau of Economic Research, Inc.
    3. Kline, Patrick, 2024. "Firm wage effects," Handbook of Labor Economics,, Elsevier.
    4. Christopher Neilson & Federico Huneeus & Conrad Miller & Seth Zimmerman, 2021. "Firm Sorting, College Major, and the Gender Earnings Gap," Working Papers 649, Princeton University, Department of Economics, Industrial Relations Section..
    5. Palladino, Marco G. & Roulet, Alexandra & Stabile, Mark, 2025. "Narrowing industry wage premiums and the decline in the gender wage gap," Labour Economics, Elsevier, vol. 94(C).
    6. D. Babet & M.Chabaud, 2024. "Follow the money ? Workers’ mobility, wages and amenities," Documents de Travail de l'Insee - INSEE Working Papers 2024-19, Institut National de la Statistique et des Etudes Economiques.
    7. Marcus Roesch & Michiel Gerritse & Bas Karreman, 2024. "Careers in Multinational Enterprises Evidence on the role of option values, public involvement and stalled sites," Tinbergen Institute Discussion Papers 24-005/V, Tinbergen Institute.
    8. González, Alessandra L. & Kong, Xianglong, 2025. "Doing business far from home: Multinational firms and labor market outcomes in Saudi Arabia," European Economic Review, Elsevier, vol. 172(C).
    9. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    10. Moser, Christian, 2016. "How Could Wage Inequality Within and Across Enterprises be Reduced?," MPRA Paper 95381, University Library of Munich, Germany.
    11. Benjamin Friedrich & Costas Meghir & Lisa Laun & Luigi Pistaferri, 2018. "Earnings Dynamics and Firm-Level Shocks," 2018 Meeting Papers 536, Society for Economic Dynamics.
    12. Jason Sockin, 2022. "Show Me the Amenity: Are Higher-Paying Firms Better All Around?," CESifo Working Paper Series 9842, CESifo.
    13. Katarína Borovičková & Robert Shimer, 2017. "High Wage Workers Work for High Wage Firms," NBER Working Papers 24074, National Bureau of Economic Research, Inc.
    14. Audoly, Richard & De Pace, Federica & Fella, Giulio, 2022. "Job Ladder, Human Capital, and the Cost of Job Loss," CEPR Discussion Papers 17746, C.E.P.R. Discussion Papers.
    15. Jaime Arellano-Bover & Fernando Saltiel, 2026. "Differences in On-the-Job Learning across Firms," Journal of Labor Economics, University of Chicago Press, vol. 44(1), pages 149-188.
    16. Ajay Bhaskarabhatla & Luis Cabral & Deepak Hegde & Thomas Peeters, 2021. "Are Inventors or Firms the Engines of Innovation?," Management Science, INFORMS, vol. 67(6), pages 3899-3920, June.
    17. Bastian Schulz & Benjamin Lochner, 2016. "Labor Market Sorting in Germany," 2016 Meeting Papers 1298, Society for Economic Dynamics.
    18. Job Boerma & Aleh Tsyvinski & Ruodu Wang & Zhenyuan Zhang, 2023. "Composite Sorting," Papers 2303.06701, arXiv.org, revised May 2025.
    19. Stéphane Bonhomme, 2021. "Selection on Welfare Gains: Experimental Evidence from Electricity Plan Choice," Working Papers 2021-15, Becker Friedman Institute for Research In Economics.
    20. Katarína Borovičková & Robert Shimer, 2024. "Assortative Matching and Wages: The Role of Selection," NBER Working Papers 33184, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • A00 - General Economics and Teaching - - General - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cwl:cwldpp:2396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Brittany Ladd (email available below). General contact details of provider: https://edirc.repec.org/data/cowleus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.