Identifying Sorting in Practice

53 Pages Posted: 19 Oct 2015

See all articles by Cristian Bartolucci

Cristian Bartolucci

University of Turin - Collegio Carlo Alberto

Francesco Devicienti

University of Turin - Collegio Carlo Alberto; University of Turin - Department of Economics and Financial Sciences G. Prato

Ignacio Monzón

University of Turin - Collegio Carlo Alberto

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Abstract

We propose a novel methodology to uncover the sorting pattern in the labor market. Our methodology exploits the additional information contained in profits, which complements the information from wages and transitions typically used in previous work. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. We provide a test for the sign of sorting that is consistent even with noise in worker rankings. We apply our approach to a panel data set that combines social security earnings records for workers in the Veneto region of Italy with detailed financial data for firms. We find robust evidence of positive sorting. The correlation between worker and firm types is about 52%.

Keywords: assortative matching, worker mobility, profits, matched employer-employee data

JEL Classification: J6, J31, L2

Suggested Citation

Bartolucci, Cristian and Devicienti, Francesco and Monzón, Ignacio, Identifying Sorting in Practice. IZA Discussion Paper No. 9411. Available at SSRN: https://ssrn.com/abstract=2675448

Cristian Bartolucci (Contact Author)

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

Francesco Devicienti

University of Turin - Collegio Carlo Alberto ( email )

via Real Collegio 30
Moncalieri, Torino 10024
Italy

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy

Ignacio Monzón

University of Turin - Collegio Carlo Alberto ( email )

Piazza Vincenzo Arbarello, 8
Torino, 10122
Italy

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