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Jan Eeckhout is a Professor of Economics at University College London and at Barcelona GSE/UPF.
Eeckhout’s research has been concerned with labor markets, matching and sorting. Eeckhout’s RePEC/IDEAS profile is at http://ideas.repec.org/e/pee1.html
Jan Eeckhout’s research addresses the notion of skill allocation across firms and across jobs, and how we can introduce the allocation of skills in otherwise standard models. Heterogeneity in skills and jobs is without doubt an important component of the labour market. Individuals are born with different innate ability and non-cognitive skills, they are brought up in diverse households, they have varying educational backgrounds, and their work experience and learning tends to further exacerbate differences between workers.
In addition there are also differences on the demand side as jobs differ in their productivity, the span of control of managers over their workers varies, and firms employ different technologies. In the presence of two-sided heterogeneity, the key determinant of the observed allocation and wages is whether there are complementarities between worker skills and job characteristics. Without complementarities (for example when individuals only differ in efficiency units of labour) it does not matter for efficiency where each individual is working.
Putting it starkly: A CEO would add no more to the value of the economy cleaning offices than orchestrating mergers and acquisitions. In a competitive market she would earn no more in one activity than the other. Her productivity could be decomposed in an additive effect for the worker and the firm: output might be higher in some occupations such orchestrating mergers and acquisitions, but it is the same for high-trained professionals as for untrained high-school dropouts.
Instead, symptomatic of complementarities in value creation is that equilibrium wages depend on both the worker characteristics and the firm types in ways that are not easily decomposable. Sorting, i.e., the matching pattern between jobs and workers, is crucial for the efficiency of the market. Efficiency is no longer simply about whether workers are employed, but the central question is whether they are employed at the right jobs. And whether the right number of people are employed in the right kind of job. A central theme in his research is the question how such complementarities shape employment patterns and wages, how this changes our modeling and thinking about the labor market, and how one might conceptually measure the importance of complementarities in existing datasets.
A longer term aim is to investigate how the issue of complementarity can be embedded into standard economic environments so that the models which result are sufficiently tractable to gain understanding by deriving analytical results, and sufficiently rich to answer interesting economic questions.