Department of Economics and Business Economics

Wage Sorting Trends

Research output: Working paperResearch


  • Wp12 17

    Submitted manuscript, 716 KB, PDF document

  • Jesper Bagger, Royal Holloway College, United Kingdom
  • Rune Majlund Vejlin
  • Kenneth Lykke Sørensen, Denmark
Using a population-wide Danish Matched Employer-Employee panel from 1980-2006, we document a strong trend towards more positive assortative wage sorting. The correlation between worker and firm fixed effects estimated from a log wage regression increases from -0.07 in 1981 to .14 in 2001. The nonstationary wage sorting pattern is not due to compositional changes in the labor market, primarily occurs among high wage workers, and comprises 41 percent of the increase in the standard deviation of log real wages between 1980 and 2006. We show that the wage sorting trend is associated with worker reallocation via voluntary quits.
Original languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages15
Publication statusPublished - 9 Aug 2012
SeriesEconomics Working Papers

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