It is well known that the quality of job match has strong influence on the efficient allocation of labor resources in the economy on the macro level and also on the productivity of individual worker. Regarding this point we assumed that the selection ...
It is well known that the quality of job match has strong influence on the efficient allocation of labor resources in the economy on the macro level and also on the productivity of individual worker. Regarding this point we assumed that the selection of preferred job at the job entry can be interpreted as a subjective indicator of job match quality and tried to estimate the effects of such selection on the wage level. For this purpose we suggested random effects switching regression model and applied this model to the data of the Korea Labor Institute Panel Study from 1998 to 2000. As the results of estimation, we found that there exists large wage differentials at least more than fifty percent caused by such selection. Considering the fact that such wage differentials can not be suitably explained by the traditional reasons of the wage discrimination, we suggest the possibility that there also exists large productivity gap caused by the job mismatch and the necessity of improving the job placement service activity.