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Labor Market Matching, Wages, and Amenities

Author

Listed:
  • Lamadon, Thibaut
  • Lise, Jeremy
  • Meghir, Costas
  • Robin, Jean-Marc

Abstract

This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonpara- metric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating di↵erentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating di↵erentials are substantial on average, but the contribution di↵ers greatly be- tween the lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities.

Suggested Citation

  • Lamadon, Thibaut & Lise, Jeremy & Meghir, Costas & Robin, Jean-Marc, 2024. "Labor Market Matching, Wages, and Amenities," CEPR Discussion Papers 19255, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19255
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    More about this item

    Keywords

    Matching; Amenities; Job search behavior; Identification; Matched employer employee data;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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