High Wage Workers Match with High Wage Firms: Clear Evidence of the Effects of Limited Mobility Bias
Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.
|Date of creation:||Jun 2012|
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|Publication status:||published in: Economics Letters, 2012, 117 (3), 824-827|
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