Department of Economics and Business Economics

Complementarity and Advantage in the Competing Auctions of Skills

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  • wp18_10

    Final published version, 1 MB, PDF-document

    Alex Xi He, Department of Economics, MIT, United States
  • John Kennes
  • Daniel le Maire, University of Copenhagen, Denmark
We use a directed search model to develop estimation procedures for the identification of worker and rm rankings from labor market data. These methods allow for a general specication of production complementarities and the possibility that higher ranked workers are not more productive in all firms. We also offer conditions for a positive/negative assortative matching that incorporate the possibility of a stochastic job ladder with on-the-job search. Numerical simulations relate the implications of the model to the implications of fixed effect regressions and give further insights into the performance of our estimation procedures. Finally, we evaluate evidence for Denmark using our methods and we show that workers are highly sorted and that higher type workers are less productive than lower type workers while employed in lower type jobs.
Original languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages63
Publication statusPublished - 3 Dec 2018
SeriesEconomics Working Papers
Number2018-10

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