2010-2016

The project's original purpose was to analyze changes in the distribution of human capital between spouses (assortative mating) and firms. This was made possible since we have measures of cognitive abilities and non-cognitive leadership from the military draft. The subproject that deals with the distribution of human capital between firms and industries, aimed to analyze the extent to which increased sorting may explain increased wage dispersion between firms and the factors behind this. This project has essentially proceeded according to plan. The second subproject aimed to analyze how spouses sort out in terms of their abilities has partly changed its focus. This is due to some empirical questions proving to be harder to solve than anticipated. The focus has shifted to how the parents' abilities are transmitted to the children, and what impact this has on children's success in school, educational attainment and on the labor market.

The most important results are 1) that there has been a sharp increase in sorting with regard to underlying abilities between firms during the period 1986-2008. According to the variance decomposition method used, sorting increased by about 40 percent during the period examined. Along with the increased return on cognitive and non-cognitive abilities, this increased sorting can account for about half of the increase in wage dispersion between firms. Approximately half of this increase can in turn be directly attributed to increased sorting, while the other half is due to increased returns on abilities. It is important here to note that returns and sorting patterns are not independent of each other, but mutually reinforcing each other. 2) The increased dispersion of abilities between firms seems mainly to be due to technological factors, while globalization plays a minor role. These conclusions are based on analyzes that show that the increased sorting can largely be explained by the expansion of the IT and telecom sectors, and the allocation of engineers which plays a major role. At the same time, it must be stressed that firms' workers have become increasingly homogenous in basically all surveyed industries. This is both because firms increasingly employ workers from a narrower range of educational groups (increasing specialization), and that the individuals within one and the same educational group are becoming more similar to each other within firms (increased positive matching). Regression analyzes show that changes in sorting have not been substantially different in industries where trade has increased more than in other industries.

Regarding the second part of the project, we find that the direct transfer of abilities from parents to children seems to be much more important than previous research has suggested. By taking into account both parents' abilities and the positive assortative matching between parents, we can explain almost 70 percent of the so-called sibling correlations in cognitive abilities and about 50 percent in non-cognitive abilities. It is an order of magnitude higher than previous research has found and it suggests that the persistence in abilities between parents and children is very high. This is of great importance for the distribution of income and differences in educational performance among children. A challenge of this project was to credibly bring in mothers' cognitive and non-cognitive abilities in the analysis, which is necessary as data from the military enlistment are lacking for women. For this purpose we have developed a two-stage estimator where the endogenous variable is missing. The work of this estimator was theoretically more demanding than anticipated, which is why the aim of the project changed.

The projects have generated a number of new research questions. Regarding the first part of the project, we intend to investigate how the sorting of skills between occupations has changed over time. This is a natural development of the project's first stage as professions are closely associated with technological change. In this project, we intend to examine in detail the extent to which the abilities of workers complement each other both within and between different occupational groups. Unlike the original part of the project, this project will thus focus on the how abilities of employees in different occupations within firms co-vary. Special attention will be paid the role of managerial abilities. We further intend to estimate production functions where we take into account the employees' cognitive and non-cognitive abilities. The aim then is to determine what proportion of observed productivity differences between companies can be explained by these hard-to-observe abilities. Finally, we plan examine how employment patterns among the most highly gifted individuals have changed over a 25 year period. We here intend to examine how the choice of education, occupation, income levels, housing choices and family patterns have changed.

As regards the second part of the project, we intend to return to the original question of how the sorting patterns of family formation has changed over time and what implications this has for the distribution of income in subsequent generations.

Results from the various steps of the two projects has been presented in a number of international contexts: The annual meetings of Eale (both projects), The annual meetings of SOLE (both projects), The annual meetings of the AEA (both projects), The Annual Meeting of Swedish Economists (both projects). In addition, the project on firms and sorting has been presented at: Bena University (Berlin), Gothenburg, Aalto University, SOFI (Stockholm) and IFAU (Uppsala). The project of sorting in the marriage market has been presented at The annual meeting of the Royal Economic Society, UCLS workshop in Öregrund, 2010 ELE Workshop in Sitges, the Institute for Labour Market Policy Evaluation (IFAU), the Research Institute of Industrial Economics (IFN), Zentrum für Europäische Wirtschaftsforschung (ZEW), CAFO Linnaeus University, Lund University, Aarhus University and Tel Aviv University.

For the project of sorting in the labor market, there is a popular science writing in Swedish published by IFAU (Report, 2015: 6). As regards the second part of the project, we intend to come back to such publications in the future.

Both subproject 1 and 2 are currently being revised after we received comments from highly ranked scientific journals and we are hopeful that they will be published after the final revision. It should be mentioned that these journals are not the first to which we sent our papers. The issue of open access becomes relevant only after publication.

Project part 1 "Firm and Skills: The Evolution of Worker Sorting" is available as a working paper in several working paper series (Stockholm University, IFAU and IFN). A very early version of the project part 2 " The Intergenerational Transmission of Cognitive Abilities and Noncognitive "is available as working paper at IFAU and IFN, but the paper has been fundamentally revised since then. Latest versions are available on the authors' websites.

Publications

"Firms and skills. The Evolution of worker sorting", IFAU WP 2015:6, IFN WP 1072, Stockholm University WP 2015:4.

"The intergenrational transmission of cognitive and noncognitive abilities", working paper available at authors' webpages.

Webpages
Jonas Vlachos: http://www.ne.su.se/english/research/our-researchers/jonas-vlachos/jonas-vlachos-professor-1.214549
Erik Lindqvist: https://sites.google.com/site/eriklindqvistsse/
Erik Grönqvist: http://www.ifau.se/en/About-IFAU/Personnel/Researchers-Research-Officers/Erik-Gronqvist/
Björn Öckert: http://www.ifau.se/en/About-IFAU/Personnel/Researchers-Research-Officers/Bjorn-Ockert/
Christina Håkansson has left academia and is currently working for the Swedish Riksbank.