Working Paper: CEPR ID: DP15480
Authors: Michael Boehm; Khalil Esmkhani; Giovanni Gallipoli
Abstract: We quantify firm heterogeneity in skill returns and present direct evidence of worker–firm complementarities. Using population data linked with cognitive and noncognitive skill measures, we estimate a model of firm-specific returns to these attributes. We find evidence of significant return heterogeneity, sorting, and earnings convexification: (1) Skills command different returns across employers; returns to the two skills correlate weakly within-firm. (2) Workers with large endowments of a skill populate firms with higher returns to it. Sorting intensity grows with cross-sectional dispersion of that skill return. (3) Complementarities and sorting have nonmonotonic effects, raising both level and skewness of earnings.
Keywords: firm heterogeneity; skill returns; sorting; earnings distribution
JEL Codes: E24; J23; J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm characteristics (L20) | skill returns (J24) |
| worker sorting into firms with higher returns (J29) | earnings distribution (D33) |
| greater return heterogeneity (D29) | more pronounced sorting behavior among workers (C92) |
| complementarities and sorting (D10) | earnings distribution (D33) |