On Globalization and the Concentration of Talent: A General Result on Superstar Effects and Matching

Abstract:

We analyze how globalization affects the allocation of talent across competing teams in large matching markets. Focusing on amplified superstar effects, we show that a convex transformation of payoffs promotes positive assortative matching. This result holds under minimal assumptions on how skills translate into competition outcomes and how competition outcomes translate into payoffs. Our analysis covers many interesting special cases, including simple extensions of Rosen (1981) and Melitz (2003) with competing teams. It also provides new insights on the distributional consequences of globalization, and on the role of technological change, urban agglomeration, and taxation for the composition of teams.

Notes:

revised October 2020

CID Research Fellow & Graduate Student Working Paper: 121
Keywords: competing teams, globalization, inequality, matching, superstar effects, technological change, urban agglomeration
JEL Classification: C78, D3, D4, F16, F61, F66, O33