The DOI matches its Crossref record; 13 of the 13 references it cites were found in a registry or an index.
High Wage Workers and Low Wage Firms: Negative Assortative Matching or Limited Mobility Bias?
Abstract
Summary: In the empirical literature on assortative matching using linked employer–employee data, unobserved worker quality appears to be negatively correlated with unobserved firm quality. We show that this can be caused by standard estimation error. We develop formulae that show that the estimated correlation is biased downwards if there is true positive assortative matching and when any conditioning covariates are uncorrelated with the firm and worker fixed effects. We show that this bias is bigger the fewer movers there are in the data, which is ‘limited mobility bias’. This result applies to any two-way (or higher) error components model that is estimated by fixed effects methods. We apply these bias corrections to a large German linked employer–employee data set. We find that, although the biases can be considerable, they are not sufficiently large to remove the negative correlation entirely.
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Cites
Matrix Differential Calculus with Applications in Statistics and Econometrics.
Magnus, J. R., & Neudecker, H. (1988) · Biometrics · doi:10.2307/2531754 · Cited by 2,699
High Wage Workers and High Wage Firms
Abowd, J. M., Kramarz, F., & Margolis, D. N. (1999) · Econometrica · doi:10.1111/1468-0262.00020 · Cited by 2,601
Panel data and unobservable individual effects
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Efficiency Wages and the Inter-Industry Wage Structure
Krueger, A. B., & Summers, L. H. (1988) · Econometrica · doi:10.2307/1911072 · Cited by 1,663
Matrix Differential Calculus With Applications in Statistics and Econometrics
Ziegel, E. (1989) · Technometrics · doi:10.1080/00401706.1989.10488622 · Cited by 1,607
Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee DataPreprint
Abowd, J. M., Creecy, R. H., & Kramarz, F. (2002) · RePEc: Research Papers in Economics · Cited by 425
Goux, D., & Maurin, E. (1999) · Journal of Labor Economics · doi:10.1086/209929 · Cited by 171
Assortative Matching with Explicit Search Costs
Atakan, A. E. (2006) · Econometrica · doi:10.1111/j.1468-0262.2006.00678.x · Cited by 164
Practical Fixed-Effects Estimation Methods for the Three-Way Error-Components Model
Andrews, M., Schank, T., & Upward, R. (2006) · The Stata Journal: Promoting communications on statistics and Stata · doi:10.1177/1536867x0600600402 · Cited by 159
Self-citation
Cited by
Firms and Labor Market Inequality: Evidence and Some Theory
Card, D., Cardoso, A. R., Heining, J., & Kline, P. (2018) · Journal of Labor Economics · doi:10.1086/694153 · Cited by 919
Managerial Attributes and Executive Compensation
Graham, J. R., Li, S., & Qiu, J. (2012) · Review of Financial Studies · doi:10.1093/rfs/hhr076 · Cited by 549
A community college instructor like me: Race and ethnicity interactions in the classroom
Fairlie, R. W., Hoffmann, F., & Oreopoulos, P. (2014) · American Economic Review · doi:10.1257/aer.104.8.2567 · Cited by 274
Leave‐Out Estimation of Variance Components
Kline, P., Saggio, R., & Sølvsten, M. (2020) · Econometrica · doi:10.3982/ecta16410 · Cited by 186
Metadata
- Authors
- Andrews, M. J., Gill, L., Schank, T., & Upward, R.
- Venue
- Journal of the Royal Statistical Society Series A: Statistics in Society
- Publisher
- Oxford University Press (OUP)
- Published
- 2008-03-28
- Volume
- 171
- Issue
- 3
- Pages
- 673-697
- ISSN
- 0964-1998 (ISSN-L)
- 1467-985X
- OpenAlex
- W2124273190
- Cited by
- 306
- References
- 13
- FWCI
- 15.17
- Type
- journal article
- Language
- en
- Open access
- closed
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- Andrews, M. J., Gill, L., Schank, T., & Upward, R. (2008). High Wage Workers and Low Wage Firms: Negative Assortative Matching or Limited Mobility Bias? Journal of the Royal Statistical Society Series A: Statistics in Society. https://doi.org/10.1111/j.1467-985x.2007.00533.x
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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