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12:30 - 13:45 25 April 2016

Occupational choice and matching in the labor market


IFS basement | Institute for Fiscal Studies (link Map)
7 Ridgmount Street | London | WC1E 7AE | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Aloysious Siow, University of Toronto

Within a country, the distribution of labor earnings is single peaked and right skewed. In earnings regressions, establishment/firm effects have significant explanatory power. Within many countries, most of the recent changes in earnings inequality, increasing or decreasing, are due to changes in earnings inequality across firms and not within firms. This paper provides a behavioral and quantitative framework for analyzing these features of the labor market. We investigate how a static competitive labor market sort heterogenous workers, by cognitive and reliability skills, into different teams and roles within teams. The model integrates the Roy model of occupational choice with Becker's model of positive assortative matching. We use this framework to quantitatively assess the roles of skilled biased technical change and increased educational attainment in explaining recent changes in earnings inequality in the US and Brazil respectively.


Institute for Fiscal Studies
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