@TechReport{iza:izadps:dp6662, author={Andrews, Martyn J. and Gill, Leonard and Schank, Thorsten and Upward, Richard}, title={High Wage Workers Match with High Wage Firms: Clear Evidence of the Effects of Limited Mobility Bias}, year={2012}, month={Jun}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={6662}, url={https://www.iza.org/index.php/publications/dp6662}, abstract={Positive assortative matching implies that high productivity workers and firms match together. However, there is almost no evidence of a positive correlation between the worker and firm contributions in two-way fixed-effects wage equations. This could be the result of a bias caused by standard estimation error. Using German social security records we show that the effect of this bias is substantial in samples with limited inter-firm movement. The correlation between worker and firm contributions to wage equations is unambiguously positive.}, keywords={fixed effects;linked employer-employee panel data;limited mobility bias}, }