The Happiness Gains from Sorting and Matching in the Labor MarketISER External Seminars

Sectoral sorting of people on the labor market not only assures the most productive use
of valuable skills but also generates individual utility gains if people experience an optimal
match between job characteristics and their preferences. Based on individual data on reported
satisfaction with life it is possible to assess these latter gains from matching. We introduce
a two-equation ordered probit model with endogenous switching and study self-selection into
government and private sector jobs. We find considerable gains from matching amounting to
an increase in the fraction of very satisfied workers from 53.8 to 58.8 percent relative to a
hypothetical random allocation of workers to sectors.

Presented by:

Rainer Winkelmann (University of Zurich)

Date & time:

24 Apr 2006 15:00 pm - 23 Apr 2006 23:00 pm

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