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Sorting on Skills and Preferences: Tinbergen Meets Sattinger

  • Dupuy, Arnaud

    ()

    (LISER (CEPS/INSTEAD))

This paper proposes an assignment model where sorting occurs on attributes including both skills (Sattinger, 1979) and preferences (Tinbergen, 1956). The key feature of this model is that the wage function admits both jobs' and workers' attributes as arguments. Since this function is generically nonlinear (Ekeland et al., 2004), even under positive assortative matching, the correlation between the contribution of workers' attributes to wages and that of jobs' attributes can vary from -1 to 1 depending on the parameters of the model, i.e. preference, technology and the distribution of both sets of attributes. The paper discusses a closed form solution of the model, presents conditions under which nonadditive marginal utility and production function are nonparametrically identified using observations from a single hedonic market and proposes a nonparametric estimator.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5143.

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Length: 62 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5143
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  1. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2013. "Matching, Sorting and Wages," Sciences Po publications 11, Sciences Po.
  2. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  3. Heckman, James J. & Matzkin, Rosa & Nesheim, Lars, 2009. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," IZA Discussion Papers 4329, Institute for the Study of Labor (IZA).
  4. Ivar Ekeland & James Heckman & Lars Nesheim, 2002. "Identifying hedonic models," CeMMAP working papers CWP06/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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