Sorting Between and Within Industries: A Testable Model of Assortative Matching
53 Pages Posted: 15 Aug 2014
Date Written: August 13, 2014
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: Suggested Citation