An Empirical Model of Wage Dispersion with Sorting

• Jesper Bagger ^[1] ; Rasmus Lentz ^[2]
  1. [1] Royal Holloway University of London

     Royal Holloway University of London

     Runnymede District, Reino Unido

     
  2. [2] University of Wisconsin–Madison

     University of Wisconsin–Madison

     City of Madison, Estados Unidos

     
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 86, Nº 1, 2019, págs. 153-190
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • We estimate an equilibrium on-the-job search model with endogenous search intensity. Workers differ by skill, firms by productivity. Workers respond to mismatch by intensive search, and sorting may result from complementarities in the match-level production function. The model is estimated on Danish-matched employer–employee data. Firms are ranked through revealed preference by the fraction of hires that is poached from other firms: the poaching rank. Identification is obtained by firm rank conditional mobility and wage patterns. Wage variation is decomposed into four sources: sorting (40%), worker heterogeneity (32%), firm heterogeneity (18%), and frictional competition (10%). A social planner can improve output net of search cost by 1.5% relative to the decentralized solution.