Working Papers
Working Papers
with Wolfgang Dauth and Duncan Roth
submitted
We examine the development of worker-firm matching over the career due to job mobility. Using administrative employer-employee data covering the universe of German employees, we measure the degree of assortative matching as the correlation of worker and firm quality measures obtained from an AKM wage decomposition. We also introduce a novel measure based on the distance between the estimates of worker and firm quality. Both measures indicate that the degree of assortative matching, on average, increases with each job move. For high-quality workers, this can be explained by job ladder models as these workers move to higher-quality firms. Low-quality workers are matched less assortatively at the beginning of their careers, but also manage to climb the job ladder at first. For this group, the increase in assortative matching increases after the third job, when they fall down the job ladder. Changes in worker-firm matching are also relevant for the extent of life cycle inequality. We estimate that the increase in assortative matching accounts for around 25% of the increase in wage inequality over the life cycle.
with Johannes Seebauer and Matteo Targa
This paper examines the evolution of wage inequality in Germany from 1985 to 2020. To capture the heterogeneity in wage dynamics, we distinguish worker wages across 265 industrial sectors and four task-based occupational classes, yielding 993 industry-by-occupation cells that can be consistently observed over the 35-year period. During this time, total wage variance increased by 9 log points, with half of the rise driven by widening differences between 22 cells. These comprise either non-routine abstract workers in high-tech industries or non-routine manual workers in low-paying retail sectors. The central role of these 22 key cells in explaining the overall increase in wage inequality reflects a combination of strong employment concentration, rising polarization in relative earnings, and increased assortative matching.