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Sorting in the Labor Market

Eeckhout, J; (2018) Sorting in the Labor Market. Annual Review of Economics , 10 (1-29) 10.1146/annurev-economics-080217-053526.

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This review surveys the literature on sorting in the labor market. There are inherent differences in worker ability and across-firm productivity. Two fundamental questions are whether the exact composition of skills of workers and productivity of firms affects output and how this composition determines the equilibrium allocation of workers within a firm and between firms. There has been a surge of research investigating the causes and consequences of the process of allocation of heterogeneous workers to firms. The focus in this review is on theory that sheds light on open questions in macroeconomics, labor, and industrial organization, with a particular emphasis on the role of firm size. Those models allow us to infer from the observed sorting patterns (who matches with whom) what the underlying technological determinants are and how they have evolved in recent decades. Furthermore, they help us understand the technological origins of important labor market trends, such as the increase in wage inequality and the change in labor market and firm dynamics.

Type: Article
Title: Sorting in the Labor Market
DOI: 10.1146/annurev-economics-080217-053526
Publisher version: https://doi.org/10.1146/annurev-economics-080217-0...
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: labor markets, sorting, wages, inequality, firm size distribution, , assortative matching, complementarities, supermodularity, unemployment
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10060446
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