Saturday, August 20, 2016

Worker segregation

Wage Segregation: In this paper we study how the sorting of workers to firms has changed over time. We do so by using detailed and direct measures of worker’s cognitive and non-cognitive skills linked to firm level data covering the entire Swedish private sector. Our main finding is that there has been a substantial increase in the sorting of workers by skill between 1986 and 2008, with larger skill differences between firms and smaller differences within firms. The main driving force behind the increase in sorting is the expansion of the ICT sector.
The theory is that high productivity workers congregate in their own firms n as they do not like subsidizing the low productivity worker.  It is cheaper to segment workers by firm  rather than within the firm. 

This is a specific effect of quantization in economics.  Fimrs using high productivity workers trade workers with each other, they all have the same employer risk therefore. 

No comments: