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Labour market matching, wages, and amenities

Author

Listed:
  • Thibaut Lamadon

    (Institute for Fiscal Studies)

  • Jeremy Lise

    (Institute for Fiscal Studies)

  • Costas Meghir

    (Institute for Fiscal Studies)

  • Jean-Marc Robin

    (Institute for Fiscal Studies)

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.
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Suggested Citation

  • Thibaut Lamadon & Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2024. "Labour market matching, wages, and amenities," IFS Working Papers W24/29, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:24/29
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    File URL: https://ifs.org.uk/sites/default/files/2024-07/WP202429-Labour-market-matching-wages-and-amenities_0.pdf
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    References listed on IDEAS

    as
    1. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    2. Stéphane Bonhomme & Kerstin Holzheu & Thibaut Lamadon & Elena Manresa & Magne Mogstad & Bradley Setzler, 2023. "How Much Should We Trust Estimates of Firm Effects and Worker Sorting?," Journal of Labor Economics, University of Chicago Press, vol. 41(2), pages 291-322.
    3. 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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    Cited by:

    1. Escudero, Veronica & Liepmann, Hannah & Vergara, Damian, 2024. "Directed Search, Wages, and Non-wage Amenities: Evidence from an Online Job Board," IZA Discussion Papers 17211, Institute of Labor Economics (IZA).

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    JEL classification:

    • A00 - General Economics and Teaching - - General - - - General

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