Sorting between and within Industries: A Testable Model of Assortative Matching

53 Pages Posted: 15 Sep 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: September 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.

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 (September 2014). NBER Working Paper No. w20472, Available at SSRN: https://ssrn.com/abstract=2496229

John Maron Abowd (Contact Author)

U.S. Census Bureau ( email )

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Francis Kramarz

Independent

Sebastien Perez-Duarte

European Central Bank (ECB) ( email )

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Germany

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

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Ian M. Schmutte

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

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United States

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

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