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The spatial sorting and matching of skills and firms

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  • Mion, Giordano
  • Naticchioni, Paolo

Abstract

In this paper we make use of a matched employer-employee database for Italy to look at the spatial distribution of wages. Using this rich database we aim to open up the black box of agglomeration economies exploiting the micro dimension of interaction among economic agents, both individuals and firms. We provide evidence that firm size and, especially, skills are sorted across space and account for a large portion of the spatial wage variation. Our data also support the assortative matching hypothesis, which we show not to be driven by co-location of good workers and firms. Finally, we point out that assortative matching is negatively related to local market size.

Suggested Citation

  • Mion, Giordano & Naticchioni, Paolo, 2009. "The spatial sorting and matching of skills and firms," LSE Research Online Documents on Economics 42670, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:42670
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    More about this item

    Keywords

    spatial externalities; individual panel-data; skills; firms’ heterogeneity; sorting; assortative matching;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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