Measuring the quality of a match

Abstract

The quality of an employment match is a central concept in labor economics. It is relevant for evaluating the welfare impact of labor market policies, and for our understanding of labor market dynamics. This paper reviews the challenges associated with measuring match quality. We first review measures commonly used in the literature, their advantages, and drawbacks. We then present novel evidence from a survey sample of US employees where alternative measures were collected simultaneously. We show that while some of these measures correlate well, others do not. Finally, we present additional partial evidence on the correlations between measures based on the National Longitudinal Survey of Youth (NLSY79), a substantially larger and nationally representative survey. The takeaway message is a word of caution regarding the interpretation of some of these measures and specific concerns regarding using wages and tenure as indicators of match quality.