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Title: Sorting Between and Within Industries: A Testable Model of Assortative Matching

Author(s): John M Abowd, Francis Kramarz, Sebastien Perez-Duarte and Ian M. Schmutte

Publication Date: September 2014

Keyword(s): industries and sorting

Programme Area(s): Labour Economics

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.

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Bibliographic Reference

Abowd, J, Kramarz, F, Perez-Duarte, S and Schmutte, I. 2014. 'Sorting Between and Within Industries: A Testable Model of Assortative Matching'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10130