Bagger, Jesper; Elholm, Malthe; Maibom, Jonas; Vejlin, … - 2026
Using 1980-2019 Danish matched employer-employee data, we unpack the rise in wage sorting - the correlation between worker and firm wage fixed effects (Abowd et al., 1999) - from 0.06 to 0.18. The rise is driven entirely by reallocation of employment from persistently low-sorting to persistently...