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

54 Pages Posted: 27 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

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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: sorting, industries

JEL Classification: J30

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. IZA Discussion Paper No. 8439, Available at SSRN: https://ssrn.com/abstract=2502299

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

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