Summary of Project Plan

This project examines key macro-distributional trends that appear to hold across many OECD economies over the past few decades: earnings inequality has risen due to greater wage differences between firms; the productivity gap between leading firms and laggards has widened; and high- and low-skill employees increasingly work in separate firms (see, among others, Andrews et al., 2019; Song et al., 2019; Criscuolo et al., 2020).

The project aims to provide a joint treatment of these economically and politically salient trends through the lens of team-based production (cf. Garicano, 2000). The central idea is that the secularly rising importance of human knowledge in production reinforces interdependencies between coworkers, as value creation in such an environment requires individuals to specialise and collaborate (Neffke, 2019; Jones, 2021). The resulting coworker interdependencies make it profitable for entrepreneurs to recruit 'superstar teams' composed of the most talented workers that pull away from 'the rest'. I am developing a theoretical model that formalises this idea and explicates its macroeconomic implications. To empirically discipline the microfoundations of this model, the project supplements administrative, matched employer-employee data with a proprietary network dataset that is informative at a very granular level about patterns of team composition and interaction in a multi-division, Fortune-100 company.

The envisioned research outputs would contribute to the goals of the Keynes Fund by providing insights into the sources of economic value and the origins of income disparities in modern economies.