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The Happiness Gains from Sorting and Matching in the Labor Market

Listed author(s):
  • Luechinger, Simon

    ()

    (University of Lucerne)

  • Stutzer, Alois

    ()

    (University of Basel)

  • Winkelmann, Rainer

    ()

    (University of Zurich)

Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on reported satisfaction with life it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. We find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocation of workers to the two sectors.

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File URL: http://ftp.iza.org/dp2019.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2019.

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Length: 35 pages
Date of creation: Mar 2006
Publication status: published in: Research in Labor Economics, 2010, 30, 233–251
Handle: RePEc:iza:izadps:dp2019
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