We propose a theory of firm production that requires diverse inputs. We show that in a competitive labor market, firms differ in their skill composition. Organizations with higher total factor productivity (TFP) are larger and hire from a broader range of skills. Technological progress leads to...

Just like perfect (frictionless) matching models, a search model is proposed that is characterized by bilateral search and vertical heterogeneity. It allows for a generally specified utility function. The equilibrium allocation is unique and exists in iterated strict dominance. The model is...

According to <link rid="b26">Pareto (1896)</link>, the distribution of income depends on "the nature of the people comprising a society, on the organization of the latter, and, also, in part, on chance." In the model developed here the "nature of the people" is captured by attitudes toward marriage, divorce,...

In 1900 only 6% of unwed teenage females engaged in premarital sex. Now, three quarters do. The sexual revolution is studied here using an equilibrium matching model, where the costs of premarital sex fall over time due to technological improvement in contraceptives. Individuals differ in their...