Ilse Lindenlaub presenting on January 11, 2021

Paper title: The Worker-Job Surplus

Abstract: The worker-job surplus — the sum of the worker’s and the employer’s values of an employment relationship — is a key object in most matching models of the labor market. It drives workers’ employment transitions and wages, as well as equilibrium sorting patterns. In this paper, we develop a theory-based empirical method to determine which of the observable worker and job characteristics impact the worker-job surplus in the data, where we exploit the mobility choices of employed workers. Our method further indicates whether workers sort along those surplus-relevant attributes when searching for jobs. Finally, it provides a test of the commonly used single-index assumption, according to which multi-dimensional worker and job heterogeneity can be collapsed into scalars. We implement our method on US data using the Survey of Income and Program Participation and the O*NET. The results suggest that a relatively sparse model underlies the data. On the job side, a cognitive and an interpersonal skill requirement impact the surplus along with the (dis)amenity of work duration as well as the workplace size. On the worker side, we find that most of the relevant characteristics are symmetric to the selected job requirements. We reject the existence of a single-index representation of these relevant multi-dimensional worker and job attributes. Finally, we use our results to shed light on multi-dimensional sorting along the relevant dimensions in the data, where we document the differential collapse of distinct job ladders during the Great Recession and its recovery.

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