Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2017:24: A distributional framework for matched employer employee data

Stéphane Bonhomme (), Thibaut Lamadon () and Elena Manresa ()
Additional contact information
Stéphane Bonhomme: University of Chicago, Postal: Chicago, USA
Thibaut Lamadon: University of Chicago, Postal: Chicago, USA
Elena Manresa: New York University, Postal: New York, USA

Abstract: We propose a framework to identify and estimate earnings distributions and worker composition on matched panel data, allowing for two-sided worker-firm unobserved heterogeneity. We introduce two models: a static model that allows for nonlinear interactions between workers and firms, and a dynamic model that allows in addition for Markovian earnings dynamics and endogenous mobility. We establish identi cation in short panels, and develop tractable two-step estimators where firms are classified into heterogeneous classes in a first step. Applying our method to Swedish administrative data, we find that log-earnings are approximately additive in worker and firm heterogeneity, with a strong association between workers and firms, and a small relative contribution of firm heterogeneity to earnings dispersion. In addition, we document that wages have a direct effect on mobility, and that, beyond their dependence on the current firm, earnings after a job move also depend on the past firm.

Keywords: two-sided heterogeneity; bipartite networks; matched employer employee data; sorting; job mobility

JEL-codes: C23; J31; J62

111 pages, December 10, 2017

Full text files PDF-file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Ali Ghooloo ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2019-02-14 14:23:07.