Working Paper: NBER ID: w23938
Authors: Isaac Sorkin
Abstract: This paper estimates workers' preferences for firms by studying the structure of employer-to-employer transitions in U.S. administrative data. The paper uses a tool from numerical linear algebra to measure the central tendency of worker flows, which is closely related to the ranking of firms revealed by workers' choices. There is evidence for compensating differential when workers systematically move to lower-paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity. The estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings.
Keywords: Compensating Differentials; Worker Preferences; Firm Rankings
JEL Codes: E24; J01; J3; J32; J42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| compensating differentials (J31) | variance in firm-level earnings (L25) |
| non-pay characteristics (J33) | worker transitions to lower-paying firms (J62) |
| removal of non-pay characteristics (J33) | earnings inequality (D31) |
| transitions to lower-paying firms (J62) | future earnings increases (J31) |
| utility derived from non-pay characteristics (J39) | worker preferences (J29) |