Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123371
Authors: 
Luechinger, Simon
Stutzer, Alois
Winkelmann, Rainer
Year of Publication: 
2007
Series/Report no.: 
WWZ Discussion Paper 01/07
Abstract: 
Sorting of people on the labor market not only assures the most productive use of valuable skills but also generates individual utility gains if people experience an optimal match between job characteristics and their preferences. Based on individual data on subjective well-being it is possible to assess these latter gains from matching. We introduce a two-equation ordered probit model with endogenous switching and study self-selection into government and private sector jobs. In an analysis with data from the European Social Survey, we find considerable gains from matching amounting to an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a hypothetical random allocation of workers to the two sectors. A companion analysis of data from the German Socio-Economic Panel shows that selection on unobservables is reduced once we include additional controls for preference heterogeneity.
Subjects: 
Matching
ordered probit
public sector employment
selection
switching regression
subjective well-being
JEL: 
D60
I31
J24
J45
Document Type: 
Working Paper

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