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Labour market matching, wages, and amenities

Author

Listed:
  • Thibaut Lamadon

    (Institute for Fiscal Studies)

  • Jeremy Lise

    (Institute for Fiscal Studies)

  • Costas Meghir

    (Institute for Fiscal Studies)

  • Jean-Marc Robin

    (Institute for Fiscal Studies)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Thibaut Lamadon & Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2024. "Labour market matching, wages, and amenities," IFS Working Papers W24/29, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:24/29
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    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. 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.
    3. 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.
    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.
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    2. Escudero, Verónica & 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.
    3. Michael Amior & Shmuel San, 2026. "Internal Pay Equity and the Quantity-Quality Trade-Off in Hiring," RFBerlin Discussion Paper Series 26052, ROCKWOOL Foundation Berlin (RFBerlin).

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    JEL classification:

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

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