The Spatial Sorting and Matching of Skills and Firms

CORE Discussion Paper No. 2006/99

33 Pages Posted: 20 Mar 2007

See all articles by Giordano Mion

Giordano Mion

University of Sussex - Department of Economics; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Paolo Naticchioni

University of Rome I; University of Cassino

Multiple version iconThere are 2 versions of this paper

Date Written: November 2006

Abstract

Using a matched employer-employee database for Italy we look at the spatial distribution of wages across provinces. This rich database allows us to contribute at opening the black box of agglomeration economies exploiting the micro dimension of the interaction among economic agents, both individuals and firms. We provide evidence that firm size and particularly skills are sorted across space, and explain a large portion of the spatial wage variation that could otherwise be attributed to aggregate proxies of agglomeration externalities. Our data further support the assortative matching hypothesis, that is "good" workers match on the labor market with "good" firms, and we further show that assortative matching is not driven by a co-location of workers and firms of similar quality. Finally, we point out that this assortative matching is negatively related to local market size.

Keywords: Spatial Externalities, Panel-Data, Skills, Firms' Heterogeneity, Sorting, Matching

JEL Classification: J31, J61, R23, R30

Suggested Citation

Mion, Giordano and Naticchioni, Paolo, The Spatial Sorting and Matching of Skills and Firms (November 2006). CORE Discussion Paper No. 2006/99. Available at SSRN: https://ssrn.com/abstract=970299 or http://dx.doi.org/10.2139/ssrn.970299

Giordano Mion (Contact Author)

University of Sussex - Department of Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

HOME PAGE: http://sites.google.com/site/giordanomionhp/

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Paolo Naticchioni

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

University of Cassino ( email )

Cassino
Italy

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