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An Empirical Model of Wage Dispersion with Sorting

  • Rasmus Lentz

    (University of Wisconsin-Madison)

  • Jesper Bagger

    (University of Aarhus)

(negative) sorting results if the match production function is supermodular (submodular). If the production function is modular, no sorting obtains. We propose an identification strategy that allows identification of not only the presence of sorting in matching, but also the type of sorting, negative or positive. Like Eeckhout and Kircher (2008) we find that the commonly used wage decomposition in Abowd, Kramarz, and Margolis (1999) does not in itself identify sorting, although the mechanisms that lead to lack of identification in our model differ from that of the partnership model studied in Eeckhout and Kircher (2008).

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Paper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 964.

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Date of creation: 2009
Date of revision:
Handle: RePEc:red:sed009:964
Contact details of provider: Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA
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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. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium wage dispersion with worker and employer heterogeneity," Sciences Po publications info:hdl:2441/dc0ckec3fcb, Sciences Po.
  3. Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2b, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
  5. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  6. Shintaro Yamaguchi, 2010. "Job Search, Bargaining, and Wage Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 28(3), pages 595-631, 07.
  7. Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2003. "On the Job Search and the Wage Distribution," CAM Working Papers 2004-09, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  8. Jan Eeckhout & Philipp Kircher, 2011. "Identifying sorting: in theory," LSE Research Online Documents on Economics 29708, London School of Economics and Political Science, LSE Library.
  9. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
  10. repec:inr:wpaper:155908 is not listed on IDEAS
  11. Dey, M. S. & Flinn, C. J., 2000. "An Equilibrium Model of Health Insurance Provision and Wage Determination," Working Papers 00-18, C.V. Starr Center for Applied Economics, New York University.
  12. Éva Nagypál, 2006. "On the extent of job-to-job transitions," 2006 Meeting Papers 10, Society for Economic Dynamics.
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