Séminaire

On Worker and Firm Heterogeneity in Wages and Employment Mobility: Evidence from Danish Register Data

Jean-Marc Robin (Sciences Po, Paris)

4 juin 2018, 11h15–12h00

Toulouse

Salle MS001

Department Seminar

Résumé

In this paper, we propose an estimation method that allows for unrestricted interactions between worker and firm unobserved characteristics in both wages and the mobility patterns along with a model of mobility that allows us to quantify sources of sorting. Related to Bonhomme et al. (2017) (BLM), our method identifies double sided unobserved heterogeneity through an application of the EM-algorithm where the firm classification is repeatedly updated so as to improve on the likelihood function. Firm classification is a result of both wage and mobility patterns in the data. We estimate the model on Danish matched employer-employee data for the period 1985-2013. The estimation includes gender, education, age and time controls. We find significant sorting on wages and that it is stable over the period. Sorting is established early in careers, increasing during the first decade after which it declines steadily. Counterfactuals demonstrate that sorting is primarily driven by 2 channels: First, a “preference” channel whereby higher wage workers are more likely to accept jobs in higher wage firms. Second, a job finding channel where the job destination distribution out of non-employment is stochastically increasing in the wage type of the worker.

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