6533b7d9fe1ef96bd126c3aa

RESEARCH PRODUCT

High Wage Workers Match with High Wage Firms: Clear Evidence of the Effects of Limited Mobility Bias

Richard UpwardThorsten SchankMartyn AndrewsLeonard Gill

subject

Positive assortative matchingMatching (statistics)Labour economicsEconomics and Econometricsmedia_common.quotation_subjectLimited mobility biasWagejel:C23Employer–employee panelsjel:J20language.human_languagejel:J30Social securityGermanlanguageEconomicsfixed effects linked employer-employee panel data limited mobility biasLiterature studyLimited mobilityHigh wageFinancemedia_common

description

Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.

yearjournalcountryeditionlanguage
2012-12-01SSRN Electronic Journal
https://doi.org/10.2139/ssrn.2089711