Labor Market Sorting in Germany

Bastian Schulz and Benjamin Lochner

No 1298, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: This paper analyzes how workers are allocated to jobs in Germany. Our main contribution is to show how labor market sorting has evolved over time across worker types and how this developments are related to wages and wage inequality. We show direct empirical evidence that wages are not necessarily increasing in the productivity of the firm a worker is matched with. This feature of the data is predicted by theoretical models of labor market sorting (Shimer and Smith, 2000; Eeckhout and Kircher, 2011), but is at odds with two-way fixed-effect models (Abowd et al., 1999), the most common empirical tool to analyze wage dispersion. We use a structural search model and the identification procedure proposed by Hagedorn et al. (2014) to empirically identify worker and firm rankings as well as the bivariate density of matches in Germany. We compute rank correlations and find that low-type workers have become increasingly sorted into low-type firms in our period of observation (1998-2008), especially out of unemployment. Sorting of high-type workers into high-type firms has, if anything, slightly decreased during our period of observation.

Date: 2016
New Economics Papers: this item is included in nep-eur
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2016/paper_1298.pdf (application/pdf)

Related works:
Working Paper: Labor Market Sorting in Germany (2016)
Working Paper: Labor Market Sorting in Germany (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1298

Access Statistics for this paper

More papers in 2016 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().