DP10130 Sorting Between and Within Industries: A Testable Model of Assortative Matching
Author(s): | John M Abowd, Francis Kramarz, Sebastien Perez-Duarte, Ian M. Schmutte |
Publication Date: | September 2014 |
Keyword(s): | industries, sorting |
JEL(s): | J30 |
Programme Areas: | Labour Economics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=10130 |
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.