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Sorting on Skills and Preferences: Tinbergen Meets Sattinger

Author

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  • Arnaud Dupuy

    (ROA, IZA. Corresponding address: ROA, Maastricht University PO Box 616, NL-6200 MD, The Netherlands. Email: a.dupuy@maastrichtuniversity.nl.)

Abstract

This paper proposes an assignment model where sorting occurs on at- tributes that are simultaneously a skill (Sattinger, 1979) and a preference (Tinbergen, 1956). The key feature of this model is that the wage func- tion 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 de- pending 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 for the nonparametric identi cation of compensating wage di¤erentials and nonadditive marginal utility functions using observations from a single hedonic market and proposes a nonparametric estimator.

Suggested Citation

  • Arnaud Dupuy, 2012. "Sorting on Skills and Preferences: Tinbergen Meets Sattinger," Working Papers 2012/13, Maastricht School of Management.
  • Handle: RePEc:msm:wpaper:2012/13
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    File URL: http://web2.msm.nl/RePEc/msm/wpaper/MSM-WP2012-13.pdf
    File Function: First version, 2012
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    References listed on IDEAS

    as
    1. James J. Heckman & Rosa L. Matzkin & Lars Nesheim, 2010. "Nonparametric Identification and Estimation of Nonadditive Hedonic Models," Econometrica, Econometric Society, vol. 78(5), pages 1569-1591, September.
    2. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2002. "Identifying Hedonic Models," American Economic Review, American Economic Association, vol. 92(2), pages 304-309, May.
    3. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
    4. Bartik, Timothy J, 1987. "Estimating Hedonic Demand Parameters with Single Market Data: The Problems Caused by Unobserved Tastes," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 178-180, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Jan Eeckhout & Philipp Kircher, 2011. "Identifying Sorting--In Theory," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 872-906.
    2. Arnaud Dupuy, 2018. "Migration in China: to Work or to Wed?," CREA Discussion Paper Series 18-06, Center for Research in Economic Analysis, University of Luxembourg.

    More about this item

    Keywords

    Hedonic models; Compensating wage differentials; Personality traits; Firms and workers fi xed effects; Nonparametric Identi cation.;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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