.g., a bonus package. Two sorting patterns are possible: Positive sorting requires that each team consist of players of same … caliber, while negative sorting does the opposite. We characterize the optimum with respect to relevant environmental factors …, ranging from the degree of effort complementarity in the team production process and the curvature of effort cost functions to …

. We prove that with extreme-skill complementarity, the skill distribution has fatter tails in large cities; with top …-skill complementarity, there is first-order stochastic dominance. Using the model to back out skills from wage and housing price data, we … find robust evidence of fat tails in large cities. Big cities have big inequality. This pattern of spatial sorting is …

This paper adds two-sided ex-ante heterogeneity and a production technology inducing sorting to the canonical Diamond …-Mortensen-Pissarides (DMP) search and matching model. Ex-ante heterogeneity and sorting have important implications for the dynamic properties …