Labor Seminars Amsterdam

Speaker(s)
Cristian Bartolucci (Carlo Alberto)
Date
2011-10-04
Location
Amsterdam

It is quantitatively difficult to measure assortative matching, because firms’ and workers’ type are generally unobserved. This paper proposes to use workers mobility to identify the strenght and the direction of assortative matching. This strategy does not require cardinal measures of the agents types. In order to understand the nature of sorting, we directly analyze the matching process between firms and workers. In the presence of positive (negative) assortative matching we should observe that good workers are more (less) likely to move to better firms than bad workers. To arrange workers and firms according to their types, we assume that agents’ payoffs are partially monotone on their types. We use within firm variation on wages to order workers, and profits to order firms. We exploit panel data that combine administrative earnings records for individual employees with detailed balance sheet data for their employers in the Veneto region of Italy. We find remarkably robust evidence of positive assortative matching. Better workers are found to have higher probability of moving to better firms.