Chapter 40 The analysis of labor markets using matched employer-employee data

Matched employer-employee data contain information collected from households and individuals as well as information collected from businesses or establishments. Both administrative and sample survey sources are considered. Both longitudinal and cross-sectional applications are discussed. We review studies from 17 different countries using 38 different systems for creating the linked data. We provide a detailed discussion of the methods used to create the linked datasets, the statistical and economic models used to analyze these data, and a comprehensive set of results from the different countries. We consider compensation structure, wage and employment mobility, and the relation between firm outcomes and worker characteristics in detail. Matched employer-employee data provide the empirical basis for further refinements of the theory of workplace organization, compensation design, mobility and production; however, the arrival of these data has been relatively recent.