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Sorting on Skills and Preferences: Tinbergen Meets Sattinger

  • Arnaud Dupuy

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

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.

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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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Paper provided by Maastricht School of Management in its series Working Papers with number 2012/13.

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Length: 47 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:msm:wpaper:2012/13
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  1. Jean-Marc Robin & Costas Meghir & Jeremy Lise, 2008. "Matching, Sorting and Wages," 2008 Meeting Papers 273, Society for Economic Dynamics.
  2. 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.
  3. Amine Ouazad, 2008. "A2REG: Stata module to estimate models with two fixed effects," Statistical Software Components S456942, Boston College Department of Economics.
  4. 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, 09.
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