Job-to-Job Transitions, Sorting, and Wage Growth

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Abstract

In this paper, we measure the contribution of match quality to the wage growth experienced by job movers. Using the Danish matched employer-employee data, we reject the exogenous mobility assumption needed to estimate a standard fixedeffects wage regression. To estimate firm fixed effects, we exploit the sub-sample of workers hired from unemployment, for whom the exogenous mobility assumption is not rejected. Then we decompose the mean and the variance of wage growth of jobto-job movers. We find that most of the wage growth experienced by job movers is attributable to an improvement in the quality of the worker-firm match rather than transitions to better firms. Also, 66% of the variance of wage growth experienced by job movers can be attributed to variance in match quality. Expected match quality growth is higher for higher-skilled occupations and high-educated workers.
Original languageEnglish
Publication date2017
Number of pages33
Publication statusPublished - 2017
EventConference on Markets with Search Frictions - The Aarhus Institute of Advanced Studies, Aarhus University, Aarhus, Denmark
Duration: 26 Oct 201728 Oct 2017

Conference

ConferenceConference on Markets with Search Frictions
LocationThe Aarhus Institute of Advanced Studies, Aarhus University
CountryDenmark
CityAarhus
Period26/10/201728/10/2017

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Cite this

Jinkins, D., & Morin, A. (2017). Job-to-Job Transitions, Sorting, and Wage Growth. Paper presented at Conference on Markets with Search Frictions, Aarhus, Denmark.