This paper examines how employer and worker specific productivity shocks transmit to wages and employment. I characterize the optimal contract in an equilibrium directed-search model. I provide conditions for identification. I estimate the model on Swedish matched employer-employee data.
We propose a framework to estimate earnings distributions and worker and firm unobserved heterogeneity while allowing for complementarities and rich mobility and wage dynamics. We estimate our model on Swedish data. We find that log-addivity provides a good approximation for earnings. We find strong sorting, small firm effects and evidence of endogenous mobility.
S. Bonhomme, T. Lamadon and E. Manresa (R&R at Econometrica)
We develop two-step and iterative panel data estimators based on a discretization of unobserved heterogeneity. We view discrete estimators as approximations, and study their properties in environments where population heterogeneity is individual-specific and un-restricted. Two applications suggest computational and statistical advantages of the method.
Imperfect Competition and Rent Sharing in the U.S. Labor Market.
with M. Mogstad and B. Setzler.
The paper uses the universe of tax record from the Internal Revenue Services to evaluate the size of rents captured by worker and firms in the U.S. labor market. Within a structural model where firms have wage-setting power we show that the size of rents is linked to the pass-trhough of firm shocks to employees' earnings. Our estimates suggets that workers are willing to pay 17% of their earnings to keep their current job versus moving to their second best.
Matching, Sorting, and Wages
T. Lamadon, J. Lise, C. Meghir and J.M. Robin
This paper analyzes the allocation of workers to firms in an economy with search friction and sorting. We present a model with two sided heterogeneity, training costs, on-the-job search and vacancy creation. We provide a constructive proof for the non-parametric identification of the model, and evaluate the properties of the associated estimator with a Monte-Carlo simulation. Finally we estimate the model using GMM on the matched employer-employee data from Sweden to decompose the sources of income inequality and quantify the output loss due to search frictions.
Evaluation of the SSP program
T. Lamadon, J. Lise, S. Seitz and J. Smith
We develop an equilibrium search model with all the characteristics of the the Canadian welfare system and the Self Sufficiency Program. In this experiment, a group of lone mothers on income assistance for longer than 12 months are offered a wage premium if they find a full-time job within a year. Using the SSP experimental data and Labor Force Survey data we estimate a model with endogenous search effort, full time and part time work, heterogeneity in disutility of work and match heterogeneity. We extend the classical firm-worker wage bargaining problem to work in the presence of non-convex budget sets introduced by non-linear policies. The model is then used to quantify the crowding out effects associated with extending the SSP program to all women in the economy.
with Y. Guéron and C. Thomas, Games and Economic Behavior (2011)
Proving the folk theorem in a game with three or more players usually requires imposing
restrictions on the dimensionality of the stage-game payoffs. We show that
all players having different discount factors can substitute for such restrictions.