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Competence, Complementarity, and Career Choice

Listed author(s):
  • Fane Naja Groes

    (Copenhagen Business School)

  • Simeon Alder

    (University of Notre Dame)

We build a tractable assignment model to identify the degree of complemen- tarity between attributes of firms and managers in production. Managers learn about their own type by observing a sequence of public signals. Each period, the sorting of firms and managers is ex ante perfectly assortative, but is generally not so ex post. We use a simulated method of moments to replicate empirical targets from a large matched employer-employee dataset covering the Danish la- bor force between 1999 and 2007. We exploit the non-monotonicity of executive compensation in the employer type to structurally estimate the degrees of com- plementarity in the production function. Our results fill an important gap in the literature on the aggregate effects of mismatch that was previously highlighted in Alder (2011).

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Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 1084.

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Date of creation: 2012
Handle: RePEc:red:sed012:1084
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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