Econometrics and Applied Micro Seminar

We present a model of the labor and education markets where individuals have heterogeneous communication and cognitive skills. The model generates teams/firms that vary in their size, and their quantity and quality of output. Each team is organized as a many-to-one matching, in which one employee is the manager and the rest are workers. Communication skills determine who become managers as well as the span of control and the wage of those managers. Students who will become future managers acquire more cognitive skills in school. Larger teams do not always pay higher average wages. Equilibrium is equivalent to the solution to a linear programming problem.
 

Joint work with Robert J. McCann, Xianwen Shi, Aloysius Siow, Ronald Wolthoff.