Erling Barth (Institute for Social Research, Norway), Harald Dale-Olsen

Assortative matching in the labour market? Stylised facts about workers and plants

This paper presents evidence on the sorting of heterogenous workers across heterogenous establishments. Individuals' wages are decomposed into a time-varying component, an individual effect, and an establishment specific effect. Individual and establishment specific effects are furthermore decomposed into an observable and an unobservable part. In terms of the observable part of the productivity effects, we find evidence of positive sorting between workers and establishments. In terms of unobservable characteristics, we find a negative correlation. We also find evidence of positive matching in terms of both observed and unobserved productivity components, between workers from different educational groups.

Keywords: Wage inequality and mobility, matching, sorting, heterogenous workers, heterogenous establishments, linked employer-employee data

JEL Codes: J21, J31, J41

Session: 6d   Room 2003   Category: Labour market dynamics 3

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