Firm Heterogeneity in Skill Returns

Arbeitspapier

We quantify firm heterogeneity in skill returns and present direct evidence of worker–firm complementarities. Within a model of firms' demand for cognitive and noncognitive attributes we show that identification depends on the availability of skill measures. Linking administrative data to test scores we document worker sorting and convex earnings–skill relationships. We find that: (1) Both skills' returns vary substantially across employers and correlate weakly within-firm. (2) Workers with large endowments of a skill populate firms with higher returns to it. Sorting intensifies with the cross-sectional dispersion of returns. (3) Complementarities and sorting significantly influence the earnings distribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16644

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials
• Subject: firm heterogeneity ; skill return ; sorting ; earnings distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Böhm, Michael Johannes ; Esmkhani, Khalil ; Gallipoli, Giovanni
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282771
• Last update: 10.03.2025, 11:45 AM CET