Individual Wage Dynamics, Continuous Firm Types and Path Dependence

Department of Economics and Decision Sciences

Speaker: Jean-Marc ROBIN (Sciences Po)

Room T-012 

Abstract :

We use French matched employer-employee data to estimate a semi-structural model of the labor market. Adding many frictions to the sequential auction model, we find that job-to-job mobility is largely inefficient. Overall, between job-to-job mobilities that should have occurred (higher surplus with poacher) but did not, and those that did occur but should not have (lower surplus in destination firm), we estimate that the proportion of employees whose last state change is inefficient is about 35%. We also find that there is strong worker-firm sorting, but it does not show up in wages. In the next section we investigate in details the role of the dynamic of match-specific wage shocks. Then, we turn to the decomposition of the variance of wages and of the match surplus. We find that the match output f(x,y), reflecting firm effects and worker-firm complementarities, is totally negligible. Only seems to matter the match-specific effect.

Joint work with Richard Blundell (UCL-IFS), Thomas Breda (PSE-CNRS) and Marc Chan (UniMelbourne)