Michael J. Böhm
Khalil Esmkhani
Giovanni Gallipoli
We quantify firm heterogeneity in skill returns and present direct evidence of worker–firm complementarities. Using population data linked with cognitive and noncognitive skill measures, we estimate a model of firm-specific returns to these attributes. We find evidence of significant return heterogeneity, sorting, and earnings convexification: (1) Skills command different returns across employers; returns to the two skills correlate weakly within-firm. (2) Workers with large endowments of a skill populate firms with higher returns to it. Sorting intensity grows with cross-sectional dispersion of that skill return. (3) Complementarities and sorting have nonmonotonic effects, raising both level and skewness of earnings.
Publication Type  
Working Paper
File Description  
Second version, May, 2022
JEL Codes  
D30: Distribution: General
J23: Labor Demand
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
firm heterogeneity
skill returns
earnings distribution