between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We … differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if …-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation …

between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We … differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if …-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation …

firm heterogeneity to wage inequality. Inspired by sorting theory, we infer firm productivity from estimating firm …-level production functions, taking into account that worker ability and firm productivity may interact at the match level. Using German …, driven by new matches between low-productivity firms and low-ability workers. At the top, sorting decreases, reflected in …