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Title:High wage workers match with high wage firms: Clear evidence of the effects of limited mobility bias PDF Logo
Authors:Andrews, Martyn J.
Gill, Leonard
Schank, Thorsten
Upward, Richard
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6662
Abstract:Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.
Subjects:linked employer-employee panel data
fixed effects
limited mobility bias
JEL:J20
J30
C23
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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