Ranking Firms Using Revealed Preference

82 Pages Posted: 16 Oct 2017 Last revised: 29 May 2023

See all articles by Isaac Sorkin

Isaac Sorkin

Stanford University - Department of Economics

Date Written: October 2017

Abstract

This paper estimates workers' preferences for firms by studying the structure of employer-to-employer transitions in U.S. administrative data. The paper uses a tool from numerical linear algebra to measure the central tendency of worker flows, which is closely related to the ranking of firms revealed by workers' choices. There is evidence for compensating differential when workers systematically move to lower-paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity. The estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings.

Suggested Citation

Sorkin, Isaac, Ranking Firms Using Revealed Preference (October 2017). NBER Working Paper No. w23938, Available at SSRN: https://ssrn.com/abstract=3053739

Isaac Sorkin (Contact Author)

Stanford University - Department of Economics ( email )

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STANFORD, CA 94305-6072
United States

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