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

Abstract

We analyze how (amplified) superstar effects impact the allocation of talent across competing teams in large matching markets. 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 reduced-form analysis covers a wide range of special cases from the literature that micro-found convex transformations of payoffs through diverse mechanisms including globalization, technological change, urban agglomeration, and inter-occupational spillovers.

Keywords: competing teams, matching, superstar effects, inequality, globalization, technological change, urban agglomeration

JEL Classification: C78, D3, D4, F16, F61, F66, O33