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Labor Market Matching, Wages, and Amenities

Author

Listed:
  • Thibaut Lamadon

    (University of Chicago)

  • Jeremy Lise

    (Cornell University)

  • Costas Meghir

    (Yale University)

  • Jean-Marc Robin

    (Sciences Po)

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 nonparametric 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 differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs greatly between the lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities.

Suggested Citation

  • Thibaut Lamadon & Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2024. "Labor Market Matching, Wages, and Amenities," Cowles Foundation Discussion Papers 2396, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2396
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    File URL: https://cowles.yale.edu/sites/default/files/2024-07/d2396_0.pdf
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    References listed on IDEAS

    as
    1. Stéphane Bonhomme & Thibaut Lamadon & Elena Manresa, 2019. "A Distributional Framework for Matched Employer Employee Data," Econometrica, Econometric Society, vol. 87(3), pages 699-739, May.
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