Project number: FK138143

Inequality slows down aggregate growth and human capital accumulation, besides individuals have strong preferences against inequality.
That is why one of the main topics of economic research is to explain why inequality has increased in the last decades. One important reason behind this trend is the increasing sorting of workers. In this framework, sorting means that workers with low earning potential cannot enter high paying firms. Thus any wage inequality will be larger if sorting occurs compared to cases where workers and firms are randomly matched. In spite of its importance, we have scant knowledge on the reasons for sorting.
In this project, we investigate three specific mechanisms which may have changed the sorting of workers. In the first project, we investigate how sorting changed after the opening of the Austrian labor market in 2011. This was an important change as the opening of the borders made new, high-paying jobs available in a daily commuting zone for workers living in Western Hungary. In the second study, we examine to what extent performance payments and higher overtime hours can explain the lower share of women in high-paying firms. The third study examines whether a firm that hires an ex-sales professional from its competitor, can it also poach the buyers of its competitors? We also investigate whether the hiring strategy of firms changes after the a new sales professional entered the firm.