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Composite Sorting

Author

Listed:
  • Job Boerma
  • Aleh Tsyvinski
  • Ruodu Wang
  • Zhenyuan Zhang

Abstract

We propose a new sorting framework: composite sorting. Composite sorting comprises of (1) distinct worker types assigned to the same occupation, and (2) a given worker type simultaneously being part of both positive and negative sorting. Composite sorting arises when fixed investments mitigate variable costs of mismatch. We completely characterize optimal sorting and additionally show it is more positive when mismatch costs are less concave. We then characterize equilibrium wages. Wages have a regional hierarchical structure − relative wages depend solely on sorting within skill groups. Quantitatively, composite sorting can generate a sizable portion of within-occupations wage dispersion in the US.

Suggested Citation

  • Job Boerma & Aleh Tsyvinski & Ruodu Wang & Zhenyuan Zhang, 2023. "Composite Sorting," NBER Working Papers 31656, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31656
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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E0 - Macroeconomics and Monetary Economics - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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