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On Globalization and the Concentration of Talent

Author

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  • Ulrich Schetter

    (Center for International Development at Harvard University)

  • Oriol Tejada

Abstract

We analyze how globalization affects the allocation of talent across competing teams in large matching markets. Assuming a reduced form of globalization as a convex transformation of payoffs, we show that for every economy where positive assortative matching is an equilibrium without globalization, it is also an equilibrium with globalization. Moreover, for some economies positive assortative matching is an equilibrium with globalization but not without. The result that globalization promotes the concentration of talent holds under very minimal restrictions on how individual skills translate into team skills and on how team skills translate into competition outcomes. Our analysis covers many interesting special cases, including simple extensions of Rosen (1981) and Melitz (2003) with competing teams.

Suggested Citation

  • Ulrich Schetter & Oriol Tejada, 2019. "On Globalization and the Concentration of Talent," CID Working Papers 121a, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:121a
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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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