Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62404
Authors: 
Andrews, Martyn J.
Gill, Leonard
Schank, Thorsten
Upward, Richard
Year of Publication: 
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

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