American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Identifying Sorting in Practice
American Economic Journal: Applied Economics
vol. 10,
no. 4, October 2018
(pp. 408–38)
Abstract
We propose a novel methodology to uncover the sorting pattern in labor markets. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. Our test for the sign of sorting is consistent even with noisy worker rankings. We apply our approach to a panel dataset that combines social security earnings records with detailed financial data for firms in the Veneto region of Italy. We find robust evidence of positive sorting. The correlation between worker and firm types is about 52%.Citation
Bartolucci, Cristian, Francesco Devicienti, and Ignacio Monzón. 2018. "Identifying Sorting in Practice." American Economic Journal: Applied Economics, 10 (4): 408–38. DOI: 10.1257/app.20170068Additional Materials
JEL Classification
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J41 Labor Contracts
- J62 Job, Occupational, and Intergenerational Mobility; Promotion
- L25 Firm Performance: Size, Diversification, and Scope
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