On Globalization and the Concentration of Talent

CID Research Fellow and Graduate Student Working Paper No. 121

50 Pages Posted: 6 Sep 2018 Last revised: 6 Jan 2020

See all articles by Ulrich Schetter

Ulrich Schetter

Harvard University - Center for International Development (CID)

Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Date Written: December 13, 2019

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.

Keywords: competing teams, globalization, inequality, matching

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

Suggested Citation

Schetter, Ulrich and Tejada, Oriol, On Globalization and the Concentration of Talent (December 13, 2019). CID Research Fellow and Graduate Student Working Paper No. 121. Available at SSRN: https://ssrn.com/abstract=3239342 or http://dx.doi.org/10.2139/ssrn.3239342

Ulrich Schetter (Contact Author)

Harvard University - Center for International Development (CID) ( email )

One Eliot Street Building
79 JFK Street
Cambridge, MA 02138
United States

Oriol Tejada

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
41446329693 (Phone)

HOME PAGE: http://www.cer.ethz.ch/mip/people/toriol

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