We study the earning structure and the equilibrium assignment of workers to firms in a model where workers have social preferences and skills are perfectly substitutable in production. We allow firms to offer long-term contracts and for frictions in the labour market in the form of mobility...

This working paper shows that models where preferences of individuals depend not only on their allocations, but also on the well-being of other persons, can produce both large and testable effects. We study the allocation to firms of workers with heterogeneous productivities to firms. We show...