TY  - JOUR
AU  - Abowd,John M.
AU  - Kramarz,Francis
AU  - Pérez-Duarte,Sébastien
AU  - Schmutte,Ian
TI  - A Formal Test of Assortative Matching in the Labor Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15546
PY  - 2009
Y2  - November 2009
UR  - http://www.nber.org/papers/w15546
L1  - http://www.nber.org/papers/w15546.pdf
N1  - Author contact info:
John M. Abowd
School of Industrial and Labor Relations
261 Ives Hall
Cornell University
Ithaca, NY 14853
Tel: 607/255-8024
Fax: 866/873-9078
E-Mail: John.Abowd@cornell.edu

Francis Kramarz
CREST-INSEE
15 blvd Gabriel Peri
Malakoff CEDEX, 92245
FRANCE
E-Mail: kramarz@ensae.fr

Sebastien Perez-Duarte
INSEE - F204
18 bd Adolphe Pinard
75014 Paris   FRANCE
Tel: 33 1 41 17 54 45
E-Mail: sebastien.perez-duarte@ensae.fr

Ian M. Schmutte
Department of Economics
Terry College of Business
University of Georgia
Brooks Hall
Athens, GA 30602
Tel: 706-542-0163
E-Mail: schmutte@uga.edu
AB  - We estimate a structural model of job assignment in the presence of coordination frictions due to Shimer (2005). The coordination friction model places restrictions on the joint distribution of worker and firm effects from a linear decomposition of log labor earnings. These restrictions permit estimation of the unobservable ability and productivity differences between workers and their employers as well as the way workers sort into jobs on the basis of these unobservable factors. The estimation is performed on matched employer-employee data from the LEHD program of the U.S. Census Bureau. The estimated correlation between worker and firm effects from the earnings decomposition is close to zero, a finding that is often interpreted as evidence that there is no sorting by comparative advantage in the labor market. Our estimates suggest that this finding actually results from a lack of sufficient heterogeneity in the workforce and available jobs. Workers do sort into jobs on the basis of productive differences, but the effects of sorting are not visible because of the composition of workers and employers.
ER  -