Sorting in the U.S. Corporate Executive Labor Market

This paper measures the degree of sorting by skill in the U.S. labor market for senior managers. I utilize both wage data and a comprehensive dataset that contains education information on 10,517 executives. I present evidence of a high degree of within-firm positive sorting: better managers are matched with better coworkers. Sorting significantly contributes to variation in productivity across firms and explains a large portion of observed differences in TFP. In addition, sorting explains 20% of variation in compensation. I consider several explanations and suggest that the findings are most easily explained by complementarities in production within executive teams