Sorting Between and Within Industries: A Testable Model of Assortative Matching

53 Pages Posted: 15 Aug 2014

See all articles by John M. Abowd

John M. Abowd

U.S. Census Bureau; Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; NBER (on leave); CREST; IZA Institute of Labor Economics

Francis Kramarz

Independent

Sebastien Perez-Duarte

European Central Bank (ECB); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Ian M. Schmutte

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Multiple version iconThere are 4 versions of this paper

Date Written: August 13, 2014

Abstract

We test for sorting of workers between and within industrial sectors in a directed search model with coordination frictions. We fit the model to sector-specific vacancy and output data along with publicly-available statistics that characterize the distribution of worker and employer wage heterogeneity across sectors. Our empirical method is general and can be applied to a broad class of assignment models. The results indicate that industries are the loci of sorting - more productive workers are employed in more productive industries. The evidence confirms assortative matching can be present even when worker and employer components of wage heterogeneity are weakly correlated.

Keywords: Wage Differentials, Human Capital, Job Matching, Simulation Methods

JEL Classification: J31, J24, E24

Suggested Citation

Abowd, John Maron and Kramarz, Francis and Perez-Duarte, Sebastien and Schmutte, Ian M., Sorting Between and Within Industries: A Testable Model of Assortative Matching (August 13, 2014). Available at SSRN: https://ssrn.com/abstract=2480381 or http://dx.doi.org/10.2139/ssrn.2480381

John Maron Abowd

U.S. Census Bureau ( email )

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Cornell University Department of Economics ( email )

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Labor Dynamics Institute ( email )

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School of Industrial and Labor Relations ( email )

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NBER (on leave) ( email )

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CREST ( email )

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IZA Institute of Labor Economics

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Francis Kramarz

Independent

Sebastien Perez-Duarte

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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Malakoff Cedex, 1 92245
France

Ian M. Schmutte (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

HOME PAGE: http://people.terry.uga.edu/schmutte/

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