Assortative Matching Research Articles

Assortative Matching and Wages: The Role of Selection

Assortative Matching and Wages: The Role of Selection

Workers, Workplaces, Sorting, and Wage Dispersion in Mexico

Between 2004 and 2018, the spread of wages in Mexico’s private labor sector remained stable. Nonetheless, the underlying factors behind salary dispersion underwent significant shifts nationally and regionally. We analyze a matched employer-employee dataset comprising the near-universe of Mexico’s formal workforce. We estimate log wage models with worker and workplace fixed effects capturing over 94% of wage variation. We then decompose national and regional earnings dispersions into worker, workplace and assortative matching components. At the national level, we find that sorting increased its importance over time, from explaining 16% of total wage variance to 19% by the end of the period. Worker- and workplace-specific factors contributed between 37% to 44% and 33% to 37% to the total spread of remunerations, respectively. Workplace factors became increasingly important during the 2014–2018 time segment, to the point that their contribution to total wage variance is equivalent to that of worker factors. The influence of workplace factors on wage dispersion correlates negatively with regional economic development: It is lowest in the North, Mexico’s most-developed region, and largest in the South, the country’s least-prosperous region. JEL Classification Codes: J21; J31; R23; O15; O54

No Line Left Behind: Assortative Matching Inside the Firm

Abstract We leverage the high degree of worker mobility across production lines in a large Indian manufacturer to estimate the sorting of workers to managers, using data on daily worker productivity. We find negative assortative matching (NAM): better workers tend to be matched with worse managers. Estimates of the production technology, however, reveal that productivity would increase by up to 4% under positive sorting. Exploiting a survey of managers and data on orders from multinational brands, we document that NAM arises, at least partly, because maintaining valuable relationships with buyers provides strong incentives to avoid delays on any given production line.

Maternal education and child mortality: Evidence from developing countries

This paper evaluates how maternal education affects child mortality in the context of 52 low- and middle-income countries. The sister fixed-effects model is employed, where we compare the child mortality outcome between biological sisters who attain different numbers of educational years. We find that an additional year of maternal education is linked with a 0.4 percentage point decrease in the likelihood of child mortality (a 4.3 % reduction relative to the sample mean). Additionally, the mechanism analysis reveals that improved women’s labor market outcome, increased access to information, assortative matching, and health input allocation are possible pathways to the link between maternal education and child mortality.

Immigration and Worker-Firm Matching

Abstract Positive assortative matching increases both the wages of more productive workers and wage dispersion. We study the effect of immigration on positive assortative matching using French employer-employee data from 1995 to 2005. We find that increases in the share of immigrants, driven by historical networks across local labor markets, generated stronger positive assortative matching between workers and firms. We present evidence suggesting that this effect was associated to higher wages for more productive workers and that the findings are consistent with increased workers' screening by firms.

Marital Bargaining and Assortative Matching on Fertility Preference : Evidence based on Cross-sectional Data in China

Background Despite the relaxation of fertility restrictions, China’s birth rate continues to decline. The Universal Two-Child Policy encourages couples to consider having a second child, often leading to a bargaining process between spouses with differing preferences. Additionally, the skewed sex ratio has increased Chinese women’s bargaining power, highlighting the importance of analyzing fertility decisions through marital bargaining. Methods This paper investigates second-child fertility decisions using data from the 2018 China Family Panel Studies and employs Ordinary Least Squares regression. The study examines assortative matching based on fertility preferences and uses the 2020 provincial-level sex ratio for individuals aged 20–39 as a proxy for women’s bargaining power in the marriage market. Results The study shows that achieving consensus on having a second child requires cooperation between spouses, particularly when their fertility preferences differ. The study also reveals that marriage matching is not random; individuals are more likely to partner with those who share the same second-child preference. Additionally, women with greater bargaining power positively influence their husbands’ desired family size, a correlation not observed in males. Conclusion The study concludes that second-child fertility decisions in China are significantly influenced by marital bargaining and the increased bargaining power of women due to the skewed sex ratio. Cooperation between spouses with differing fertility preferences is crucial for reaching a consensus on having a second child.

The law of large numbers for large stable matchings

In many empirical studies of a large two-sided matching market (such as in a college admissions problem), the researcher performs statistical inference under the assumption that they observe a random sample from a large matching market. In this paper, we consider a setting in which the researcher observes either all or a nontrivial fraction of outcomes from a stable matching. We establish a concentration inequality for empirical matching probabilities assuming strong correlation among the colleges’ preferences while allowing students’ preferences to be fully heterogeneous. Our concentration inequality yields laws of large numbers for the empirical matching probabilities and other statistics commonly used in empirical analyses of a large matching market. To illustrate the usefulness of our concentration inequality, we prove consistency for estimators of conditional matching probabilities and measures of positive assortative matching.

Intra-clan marriage in modern times: the role of elite education in assortative mating

Studies have shown a tendency for educational elites to marry within the elite circle in China. However, little research explores how they find a partner and the platforms’ roles in the process. We fill this gap by focusing on an online dating platform targeting alumni of elite universities. We interviewed the core staff of the platform to examine its operations. Through thematic analysis, we analyzed users’ self-representations in their dating profiles and the platform’s relatively high matching success rate. To achieve assortative matching for its elite users, the platform developed a large elite user base by setting university prestige as a dating threshold, hiring staff from elite universities, and providing profile editing and posting services. Users highlighted their privileged family backgrounds, elite university experiences, time-consuming hobbies, and preferences for a soulmate, as they aimed to attract similar partners. Our research reveals a new form of intra-clan marriage that has emerged with the massification of higher education. This homogamy, based on high levels of cultural capital, forms a social enclosure that may reinforce cultural inequalities beyond higher education.

Human Capital, Gains from Marriage, and Assortative Matching: A Unifying Framework

Human Capital, Gains from Marriage, and Assortative Matching: A Unifying Framework

Assortative Matching and Wages: The Role of Selection

Assortative Matching and Wages: The Role of Selection

Job Mobility and Assortative Matching

Job Mobility and Assortative Matching

Assortative Matching and Wages: The Role of Selection

Assortative Matching and Wages: The Role of Selection

Skill-driven Acquisitions: Assortative Matching on Labor Skill Demand

Skill-driven Acquisitions: Assortative Matching on Labor Skill Demand

Axiomatic Measures of Assortative Matching

Axiomatic Measures of Assortative Matching

Talent and the social physics of inequalities

Talent and creativity are widely regarded as the ultimate factors and drivers of economic success in societies experiencing rising income inequalities, job polarization, and global mobility of high-skilled workers. Yet, due to obstacles surrounding their definition, the content and causal effectiveness of these two factors remain obscure, or are even dismissed as purely social constructs. Drawing mainly on studies of artistic and scientific work, this article proposes avenues for solving this enigma, by connecting four research strands: the imbalances present in creative career trajectories arising from relative, performance-based valuation; the multidimensionality of skills and the multi­stage training process; the variability of non-routine work; and the stratification effect of assortative matching in teamwork and collaboration. The final section examines how the workforce “talentification” impacts compensation practices, with pay scales getting legitimized according to large, supposedly Paretian-like individual performance differentials.

Multidimensional Sorting under Random Search

We analyze sorting in a standard market environment characterized by search frictions and random search, but where both workers and jobs have multi-dimensional characteristics. We first offer a definition of multi-dimensional positive (and negative) assortative matching in this frictional environment. According to this notion, matching is positive assortative if a more skilled worker in a certain dimension is matched to a distribution of jobs that first-order stochastically dominates that of a less skilled worker. We then provide conditions on the primitives of this economy (technology and distributions) under which positive sorting obtains in equilibrium. We show that in several environments of interest, the main restriction on the primitives is a single-crossing condition of the technology, although in general further restrictions on type distributions are needed. Guided by our theoretical framework, we conduct simulation exercises to quantify the errors in assessing sorting, mismatch and policy by wrongly assuming that heterogeneity is one-dimensional when it is really multi-dimensional.

Assortative Matching of Exporters and Importers

This paper studies how exporting and importing firms match based on their capability by investigating the change in such exporter-importer matching during trade liberalization. During the recent liberalization of the Mexico-U.S. textile and apparel trade, exporters and importers often switch their main partners as well as change trade volumes. We develop a many-to-many matching model of exporters and importers where partner switching is the principal margin of adjustment, featuring Beckerian positive assortative matching by capability. Trade liberalization achieves efficient global buyer-supplier matching and improves consumer welfare by inducing systematic partner switching. The data confirm the predicted partner-switching patterns.

Two‐sided productivity heterogeneity, firm boundaries, and assortative matching

AbstractWe consider a market where each firm is created by the combination of two complementary assets that are heterogeneous in their productivity. After assets match endogenously, their owners choose between two ownership structures: centralized organization (integration) and arm's length organization (nonintegration). Our main focus is on the interplay between productivity heterogeneity and firm boundary decisions. When firms choose between distinct ownership structures, the standard single‐crossing condition that guarantees positive assortative matching may fail to hold. We provide a novel condition—the congruent marginal contributions property—which guarantees monotone matching with respect to asset productivity. Furthermore, we provide conditions under which integration at the bottom of the productivity ladder is the market equilibrium; an organizational pattern that has been largely unexplored by the theoretical and empirical literature. We investigate the effect of model primitives on the equilibrium distribution of output. Moreover, our model offers interesting testable implications regarding firm boundary decisions.

Auditor sustainability focus and client sustainability reporting

We examine the relationship between auditors' sustainability focus and their clients' sustainability reporting. Sustainability reporting is of increasing social and regulatory interest following SEC guidance on the provision of sustainability disclosures. Auditors can bridge the gap between a myriad of technical guidance and their clients. Positive assortative matching could occur between clients who plan to increase their sustainability reporting and auditors who have a greater sustainability focus, with sustainability alignment comprising part of client strategy for credibly reporting sustainability information. Specifically, we examine auditor-client sustainability alignment through the association between relative auditor sustainability focus and their clients' sustainability disclosures and activities. We measure auditors' sustainability focus by examining the sustainability focus in auditors’ tweets. We find that auditor sustainability focus is positively associated with client sustainability reporting, through both sustainability disclosures and social and governance sustainability activities. Our study provides a greater understanding of auditor involvement in sustainability reporting.

Strategic incentives when implementing Dorfman testing with assortative matching

The Dorfman pooled testing scheme is a process in which individual specimens (e.g., blood, urine, swabs, etc.) are pooled and tested together; if the merged sample tests positive for infection, each specimen from the pool is tested individually. Through this procedure, laboratories can reduce the expected number of tests required to screen a population. The literature has often advocated in favor of using ordered partitions to screen the population, i.e., of pooling subjects with similar probability of infection together, as doing so simultaneously minimizes the expected number of tests, the expected number of false negatives, and the expected number of false positive classifications, provided that certain technical conditions hold. One potential limitation of using ordered partitions, however, is that they may incentivize some subjects to misreport their types to the tester. Indeed, if subjects wish to avoid being detected as infected, ordered partitions would incentivize them to falsely claim that they have a low probability of infection (assuming that pooled testing is subject to dilution effects). These incentives would disappear if subjects were matched randomly, regardless of their probability of infection. In this article, we derive conditions under which ordered partitions outperform matching subjects randomly, despite these incentives.